Karnataka CM Basavaraj Bommai heads panel on rationalisation GST rates

GoM has two months to suggest means to restructure multiple slabs

Setting the stage for an overhaul of the multiple tax rates under the Goods and Services Tax regime, the government has tasked a group of ministers (GoM) led by Karnataka Chief Minister Basavaraj S. Bommai with proposing a rationalisation of tax rates and considering the merger of different tax slabs within two months.

Currently, the GST regime has five broad tax rate slabs of zero, 5%, 12%, 18% and 28%, with a cess levied over and above the 28% on some goods, and special rates for items like precious stones and diamonds.

While Finance Minister Nirmala Sitharaman had announced, on September 17, a GST Council decision to set up two GoMs to shore up revenues, at the time, she had said that one of the panels will only look at tax rate rationalisation issues to correct anomalies, not the tax slabs per se. Ms Sitharaman had indicated that the effective tax rate under GST had slipped from the original revenue neutral rate of 15.5% to 11.6% ‘knowingly or unknowingly’ due to multiple rate cuts since GST’s introduction in July 2017.