To measure the mood of the states before the GST official’s meeting in late May, the GST officials secretariat seeks the views of the states on the scope of raising the tax rates on 143 items, in the majority of the cases to revert the rate to 28% from 18%.
The State Minister mentioned that “The opinions of the states have been sought on raising the GST rates on 143 items. After getting a sense of the opinion of states, the proposals may be put up before the GST Council,”
Latest Update
- The government has clarified that there is no discussion between states and the GST council on increasing the slab rate on 143 items with states. Read press release
In the month of December 2018, the GST official reduced the tax rates on the bigger number of items consisting of durables, electronic goods, and furniture items, from 28% to 18%. The same comprises some televisions, water coolers, ice cream freezers, milk coolers, food grinders, paints, digital cameras, video camera recorders, and video game consoles and sports requisites. From 28% to 18% the rates on chocolates and other food preparations containing cocoa were reduced in November 2017.
The recommendations by the group of ministers conducted by Karnataka chief minister Basavaraj Bommai on GST rate rationalization would seem to be ready soon post to opting the inputs from the states. The GST officials might acknowledge these proposals in the 3rd week of May.
With the clashing purposes of increasing revenue receipts and controlling runaway inflation caught, the Centre may make a pitch for calibrated hikes in the GST rates over the next couple of years, rather than a one-time trimming of the slabs from four at present to three, according to sources.
The states know for the reduction in the tax revenues post-June when a 5-year revenue cover for them would cease to exist. The plan to raise the GST would seem the need to take the weighted average GST rate from a little over 11% at the current to the estimated revenue-neutral rate of 15-15.5% within a two-three year duration, however, will not surprise the consumer though a straight rise in rates.
In the current times, there are 4 major GST slabs 5%, 12%, 18%, and 28%. Nearly 70% of the GST revenues occur from over 480 items which draw 18% GST. The items beneath 12% and 18% slabs must be transferred to the new median slab of 15%.
Kerala finance minister KN Balagopal, a member of the GoM, commented: “We have identified 25 items, including refrigerators, where benefits of GST rate reductions have not been passed on to consumers by the companies. These rate cuts should now be reversed.”
