The Group of Ministers (GoM) met on the GST rate rationalisation has ended with the state finance minister accepting the plan of the centre to lessen the multiple tax slabs.
The proposal, placed before, aims to replace the current four rates of 5, 12, 18, and 28 per cent with just two main slabs.
Before the six-member GoM led by Bihar Deputy Chief Minister Samrat Choudhary, the proposal was placed to supersede the existing four GST Slab rates of 5, 12, 18, and 28 per cent with just two main slabs.
As per the updated framework, ‘merit’ goods and services will draw 5 per cent GST, and most other items (standard) will come under an 18 per cent standard rate.
On a small set of specified sin goods, there will be a higher 40% levy. A sin tax is a particular tax that the government places on these goods. It aims to prevent people from utilising the same and to lessen the harm they can cause.
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Finance Minister Nirmala Sitharaman expressed that an easier system would provide the advantage to the common man, farmers, the middle class, and small businesses, and make GST transparent and growth-oriented.
All the items that are in the 12% slab will move to 5% as it is part of the amendment.
Also, the products with a 28% tax slab will get shifted to the 18% bracket, which the centre assumes will rectify the compliance and lessen the complexity.
The recommendations of the centre will be reviewed by the GoM to waive the GST on individual health and life insurance premiums.
The idea has been kept by most states, which specify the requirement for stringent surveillance to ensure that the insurance companies actually pass on the benefit to the customers. The same exemption has a cost of nearly Rs 9,700 crore in the annual revenue.
GST Council shall take the final decision on the suggestions in its upcoming 56th meeting in September.
