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The Fitment committee, comprising tax officers from states and the Centre, has made many "sweeping" recommendations to the GoM regarding slab and rate changes and taking items out of the exemption list.
The GST Council, chaired by Finance Minister Nirmala Sitharaman, is likely to extend the tenure of the Group of Ministers (GoM) on rate rationalisation formed under the chairmanship of Karnataka CM Basavaraj Bommai, sources told CNBC-TV18 exclusively. The Council will meet on December 31 to discuss, among other things, the report of the panel of state ministers on rate rationalisation. This will be a physical meeting, which will also discuss correction in duty inversion for certain goods.
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The GoM was to submit its report on rate rationalisation on Friday. The panel has reviewed items under an inverted duty structure to help minimise refund payout. It is yet to meet for the last time to discuss possible rate hikes and the merger of slabs to make the current rates revenue neutral.
The 46th GST Council meeting to be held in Delhi will also be an extension to the pre-budget meeting with state finance ministers on December 30, a PTI report said.
Besides, the Fitment committee, comprising tax officers from states and the Centre, has made many "sweeping" recommendations to the GoM regarding slab and rate changes and taking items out of the exemption list. Currently, there are as many as six slabs - 0 percent, 0.25 percent for semi-precious stones/diamons, 3 percent for precious metals, 5 percent, 12 percent, 18 percent, and 28 percent for other goods and services. On the top of the highest slab, a cess is levied on luxury and demerit goods.
Tax administrations ideally want just three rates and there have been demands of merging the 12 and 18 percent slabs. There are also demands that some items be taken out from the exempt category to balance the impact of slab rationalisation on revenue.
GoM's task was to rationalise the whole range of GST rates. This included reviewing exemptions, tax slab rates, the merger of tax slab rates, and inverted duty structure. It was tasked to submit its report by November-end.
West Bengal's former finance minister Amit Mitra has urged the Union finance minister to roll back a proposed hike in textile from 5 percent to 12 percent saying this would lead to the closure of around one lakh textile units and 15 lakh job losses.
Meanwhile, Telangana Industries Minister KT Rama Rao has urged the Centre to withdraw the proposed plan to increase GST rates. The industry has also opposed the rise in tax from 5 percent, citing higher compliance cost especially for the unorganised sector and MSMEs.
With inputs from PTI
(Edited by : Vijay Anand, Yashi Gupta)
First Published: Dec 29, 2021 9:00 PM IST