GST The Group of Ministers formed to rationalize the rates on Monday recommended increasing the tax rate on harmful products like cold drinks, cigarettes and tobacco products from the current 28% to 35%. If this recommendation is accepted then the tax burden on these products will increase. Due to this their prices are sure to increase. An official said that the Group of Ministers (GoM) constituted under the chairmanship of Bihar Deputy Chief Minister Samrat Chaudhary also decided to rationalize the tax rates on garments. This group was formed to give suggestions related to rationalization of Goods and Services Tax (GST) rates. The GST Council will take the final decision on the decisions taken in the meeting of the Group of Ministers.
New rate of 35 percent proposed
The Group of Ministers will propose changes in tax rates on a total of 148 items to the GST Council. “The net revenue impact of this move will be positive,” an official said. “The Group of Ministers has agreed to impose a special rate of 35 percent on aerated beverages (cold drinks) other than tobacco and its products,” the official said. The official said the four-tier tax slabs of five, 12, 18 and 28 per cent will continue and a new rate of 35 per cent has been proposed by the GoM. Along with this, the GOM has said that readymade garments costing up to Rs 1,500 will be taxed at five per cent, while garments priced between Rs 1,500 to Rs 10,000 will be taxed at 18 per cent and garments costing more than Rs 10,000 will be taxed at 28 per cent.
GST Council meeting on 21 December
The report of the Group of Ministers is expected to be discussed in the GST Council meeting on December 21. The council will be chaired by Union Finance Minister Nirmala Sitharaman and will also include finance ministers of states. Only the GST Council will take the final decision on change in GST rate. Currently, GST is a four-tier tax structure with slabs of five, 12, 18 and 28 percent. Meanwhile, the GoM constituted on GST Compensation Cess has decided to seek more time of about six months from the GST Council to submit its report. The group was to submit its report to the GST Council by December 31.
GOM was constituted
This GOM was formed under the leadership of Minister of State for Finance Pankaj Chaudhary. It includes members from Assam, Chhattisgarh, Gujarat, Karnataka, Madhya Pradesh, Punjab, Tamil Nadu, Uttar Pradesh and West Bengal. “The GoM decided that the compensation cess case involved several legal issues,” the official said. Various aspects of the law have to be discussed in detail, which will take time. It has been decided to seek extension of time for submitting the report to the Council.” In such a situation, this group of ministers can ask for more time of five to six months.
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