The Group of Ministers (GoM), working towards reforming and rationalizing the Goods and Services Tax (GST) in India, has delayed submitting its report to the GST Council. This report suggests changes in tax rates on 148 items. Bihar Deputy Chief Minister and GOM convener Samrat Chaudhary said that the report will now be presented in the next meeting of the council. This report proposes changes in GST rates on various textiles, bicycles and other items.
The Group of Ministers has made recommendations to rationalize tax rates on various items. It has been suggested to increase the tax rate on harmful beverages and tobacco products from 28% to 35%. At the same time, the new rates proposed on garments are as follows
The GoM has also given recommendations to reduce the tax burden on essential commodities. It is proposed to reduce GST on packaged drinking water (20 liters or more) from 18% to 5%. Apart from this, it has also been suggested to reduce the GST rate on bicycles and exercise notebooks priced below Rs 10,000 from 12% to 5%.
The current structure of GST consists of four slabs (5%, 12%, 18%, and 28%). Luxury and demerit goods are taxed at 28%, while essential goods are taxed at 5%. The proposed changes are a step taken towards simplifying the tax system and increasing revenue.
An increase in tax rates will bring more revenue to the government, but it may lead to a decline in demand for high-value goods. On the other hand, reducing taxes on essential commodities will provide relief to the general public. This step may also affect competition in the market of textiles and essential commodities.
These proposals will be discussed in the next meeting of the GST Council, and it will be seen how these changes will be implemented and what will be their economic and social impacts.
