GST GoM on rate rationalisation to meet on June 17; to deliberate on merger of slabs, rate change

In what could change the matrix of the Goods and Services Tax (GST) regime, especially when it comes to exisitng rates and merger of slabs, the key Group of Ministers (GoM) is all set to meet on June 17 to firm up its proposal.

According to sources, who did not wish to be quoted, "The GoM is likely to discuss the proposal to shift rate slabs from current 5 percent to 7 percent or 8 percent and the 18 percent slab to 20 percent."

However, the GoM is likely to put in a word of caution to be adopted by the council while considering its report that the “timing of implementation requires careful consideration,” sources added.

GST Council may discuss cryptocurrencies, composition of tribunals in June meet

Also on the agenda of the GoM is to "prune the list of exemptions which can be continued under GST, correction of inverted duty structure wherever needs, especially to give a nuanced look at the textile sector," sources added.

It was during the last council meeting in December 2021, when the council had unanimously decided to postpone the decision to correct the inverted duty structure on textiles and had left it for the GoM to come back to the council on the proposal after a detailed study.

However, experts and key policy watchers shared that the government might not want to upset the textile traders and manufacturers given the upcoming key state elections, especially in the state of Gujarat.

Meanwhile, the GoM has had a series of meeting already last year in November, and it is expected that the GoM could give its final report post the upcoming meeting.

“GoM was given time to submit its final report before next GST Council meet, which is likely to be scheduled by the end of this month, thus, it could be that the next meeting of GoM on June 17, could be its final meeting, post which the chairman of the GoM Karnataka CM Basavaraj Somappa Bommai, could be submitting the report to the GST Council and union finance minister Nirmala Sitharaman,” sources to CNBCTV18.

Also read: GST Council Meet: Status quo likely on textile tax but online gaming, casinos may come under 28% slab

Though, "The discussion on the rate change and slab merger could not be an easy task, given the opposition party ruled states who are the members of the GoM -- Rajasthan, West Bengal and Kerala, who could dissent in the meeting if the proposed rate changes and slabs are leading to further increase in inflation and cost of living for the common man," sources quoted above added.

There are 7 states who are members to the GoM -- Bihar, UP, Rajasthan, West Bengal, Karnataka, Goa and Kerala.

Apart from this, when CNBC-TV18 checked the view of the union finance ministry on the rate rationalisation proposal, sources added that the North Block thinks, "Increased inflationary pressures, geo-political developments already impacting economy adversely, rate rationalization will depend on the final report with a calibrated approach of implementation to ensure minimum impact on economy, public sentiment."

All eyes are now on June 17, as the crucial meeting could flip the GST situation in either side of the direction for the consumers and the economy.

Also read: FM Nirmala Sitharaman unveils EASE 5.0 for cleaner, smarter PSBs