GoM clears two-slab GST: 5% and 18%

The Group of Ministers (GoM) on Rate Rationalisation, formed by the Goods and Services Tax (GST) Council, has decided to accept the Centre’s two-rate structure proposal for GST and will be recommending this to the GST Council, the GoM chairperson and Bihar deputy chief minister Samrat Choudhary said on Thursday.
This is the first of two steps the proposals must pass before implementation. The second step would be for the GST Council to accept the changes.
“It was the Centre’s proposal to end two slabs of GST, the 12% and 28% slabs,” Mr. Choudhary told reporters. “We discussed that proposal and have supported it. We have recommended it, and now the GST Council will decide on this.”
The Centre has not announced the date of the next GST Council meeting, although it is expected to take place in early September.
Talking to The Hindu, Kerala Finance Minister K.N. Balagopal, a member of the GoM, said the proposal from the Union government was not discussed in detail by the GoM.
“The discussion should happen within the GST Council and the Council will take a final decision. The GoM has forwarded the proposal of the Union Government with some observations that it should discuss the possibility of loss in revenue for the States too. We have suggested that if the States incur any losses due to this rationalisation, there should be a mechanism to compensate the States,” Mr. Balagopal said.
The Centre’s proposal involves retaining just the 5% and 18% slabs in the current GST structure and doing away with the 12% and 28% slabs. This would entail 99% of the items in the 12% slab moving to 5%, and 90% of the items in the 28% slab moving to 18%.
The remaining items in the 28% slab — comprising ‘sin’ goods and services such as tobacco, cigarettes, and online real-money gaming — would be moved to a higher 40% slab. However, the compensation cess currently being levied on the items in the 28% slab would no longer apply.