Even as the prices of key commodities in India are already facing upward pressures, the GST Council is now reported to have sought the views of states for increasing rates on 143 items. The products on which GST rates might be increased include handbags, perfumes/deodorants, chocolates, chewing gums, apparel & clothing accessories of leather, and walnuts, among others.
Of the total 143 items, 92 per cent are proposed to be shifted from the 18 per cent tax slab to the top 28 per cent slab, according to a report by Indian Express quoting sources. The 143 items include custard powder, watches, papad, suitcases, gur (jaggery), handbags, perfumes/deodorants, power banks, colour TV sets (below 32 inches), chocolates, ceramic sinks, wash basins, chewing gums, walnuts, goggles, frames for spectacles/goggles, non-alcoholic beverages, and apparel and clothing accessories of leather.
Items such as papad and gur (jaggery) might be shifted from zero to the 5 per cent GST slab. GST rate for walnuts may get increased to 12 per cent from 5 per cent, for custard powder to 18 per cent from 5 per cent and for table and kitchenware of wood to 18 per cent from 12 per cent, the report said.
Meanwhile, according to reports, the GST Council, the governing body for the indirect tax regime in the country, in its meeting next month may also consider a proposal to do away with the five per cent slab by moving some goods of mass consumption to three per cent and the remaining to eight per cent categories.
Currently, there are four GST slabs — 5 per cent, 12 per cent, 18 per cent, and 28 per cent. The 18 per cent slab has 480 items, from which about 70 per cent of the GST collections come. Apart from this, there is an exempt list of items like unbranded and unpacked food items that do not attract the levy. The Council may also decide to prune the list of exempt items by moving some of the non-food items to 3 per cent slab, a PTI report said.
Discussions are also on to increase the 5 per cent slab to either 7 or 8 or 9 per cent, according to the report. A final call will be taken by the GST Council, which comprises finance ministers of both Centre and states, in the next meet in May.
GST Compensation System Ending
The GST compensation regime is coming to an end in June. Last year, the Council had set up a panel of state ministers, headed by Karnataka Chief Minister Basavaraj Bommai, for suggesting ways to augment revenue by rationalising tax rates and correcting anomalies in the tax structure.
The central government was mandated to compensate the states for their revenue shortfall due to the roll-out of the GST system, for five years till June 2022. The Centre had also agreed to protect the states’ revenue at 14 per cent per annum over the base year revenue of 2015-16.
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