CNBC-TV18 has learned that the Group of Ministers (GoM) formed to examine the issue of GST exemption has agreed to phase out exemptions and correct the inverted duty structure for various goods and services.
The GST Council nominated GoM, which is a group of ministers on rate reversion correction of inverted duty structure phasing out of exemptions. Basically, the rate rationalisation exercise has started.
Two meetings of the GoM have already taken place. The last meeting took place on November 20 and post that it has been decided that exemptions need to be phased out, except for a very few items that are of mass consumption or for agriculture use, sources said.
Similarly, wherever there is an inverted duty structure leading to loss to the domestic manufacturers to domestic business, that needs to be corrected.
A final meeting is now slated for November 27 in Delhi to finalise the details of the merger of the slabs.
There have been talks about the four-rate structure to come down to either three or two-rate structure, which should be an ideal GST of the future for India. The discussions regarding the same are yet to take place.
There have been proposals in the works for the 5 percent slab to be raised to 8 percent. Similarly, the 12 percent and 15 percent slab need to be merged to a competitive rate that could be anything between 15 to 18 percent or even higher at 20 percent. That is something likely to come up in the next GoM meeting.
As of now, all the proposals by the fitment committee on phasing out exemptions and on correction of inverted duty structure have been proposed and cleared by the GoM.
However, GoM is of the view that any changes in the rates should be kept in mind or be levied only once the economy stabilises with the COVID-19 shocks.