GST Council may do away with 5% rate; move items to 3% & 8% slabs

Currently, GST is a four-tier structure of 5, 12, 18 and 28%

With most States on board to raise revenue so that they do not have to depend on Centre for compensation, the GST Council at its meeting next month is likely to consider a proposal to do away with the 5% slab by moving some goods of mass consumption to 3% and the remaining to 8% categories, sources said.

Currently, GST is a four-tier structure of 5, 12, 18 and 28%. Besides, gold and gold jewellery attract 3% tax.

In addition, there is an exempt list of items like unbranded and unpacked food items which do not attract the levy.

Sources said in order to augment revenue the Council may decide to prune the list of exempt items by moving some of the non-food items to 3% slab.

Sources said that discussions are on to raise the 5% slab to either 7 or 8 or 9 %, a final call will be taken by the GST Council which comprises finance ministers of both Centre and States.

As per calculations, every 1% increase in the 5% slab, which mainly includes packaged food items, would roughly yield an additional revenue of ₹50,000 crore annually.

Although various options are under consideration, the Council is likely to settle for an 8% GST (Goods and Services Tax) for most items that currently attract 5% levy.