GoM considers eliminating the 12 % GST slab

2 Aug 2022 , 10:54 AM

The Goods and Services Tax Council assigned a committee of ministers to examine rate rationalization, and they are now considering eliminating the 12 percent slab while keeping the 18 percent and 28 percent slabs.

Thanks to the source, People with knowledge of the situation, told ET that the majority of the group's members believed that the 12 % slab, which makes up around 8% of the overall GST income, might be eliminated. "One of the choices is this. The 12% slab now makes up the smallest portion of revenues. It would be simplest to get rid of it, "said one of the individuals previously cited.

The 12 % tax rate applies to commodities including butter, ghee, fruit juice, almonds, footwear up to Rs1,000, a number of processed food items, solar water heaters, and hotel accommodations costing up to Rs1,000 per day, among others.

The GST Council would make the final determination about any adjustment in rates. The GoM, led by the chief minister of Karnataka, Basavaraj Bommai, has been entrusted with making recommendations for rationalizing tax rates, combining tax slabs, reviewing the exempt list, and correctly inverting duty. In June, the GoM was granted a further three months to complete its final report.

Tetra Pak, printing, writing, or drawing ink, knives with cutting blades, paper knives, pencil sharpeners and blades, spoons, forks, ladles, skimmers, dairy equipment, power pumps, and LED lamps were among the items that were moved to the 18 percent slab from the 12 percent slab at the 47th GST Council meeting held in Chandigarh in June.

When the GoM meets later this month, it is anticipated that the option will be covered. The GST has four slabs: 5%, 12%, 18%, and 28 percent. It replaced a number of state and federal taxes. In addition to the four main slabs, cut diamonds, jewelry, and precious metals are taxed at rates of 1.5 percent and 3 percent, respectively. Some commodities, including cars, are subject to a top-up compensating cess. The GST rate for necessities is only 5%, whereas the highest tax for sin and luxury products is 28%.

The 28 percent slab provides a 16 percent contribution to the income pot. Although there are fewer goods in the 18 percent slab, it accounts for 65 percent of total sales. The 10 percent and 8 percent funds come from the slabs of 5 and 12 percent respectively. The GoM, the source claimed, is not interested in changing the slabs with a 5 percent or 28 percent content.