GOM yet to submit report on GST rate rationalisation

The group of ministers (GOM) constituted by the Goods and Services Tax (GST) Council for rationalisation of indirect tax rates is yet to submitted its report to the apex decision-making body, a finance ministry spokesperson said.

He said the GOM is working on the matter and “no feedback from states has been sought on the GST rates for any specific items or specific proposals” to restructure the rates. The GOM is headed by Karnataka Chief Minister Basavaraj Bommai.

It is expected that the GOM, after consulting all stakeholders, would submit is report to the Council for its consideration, he said. The GST Council is chaired by Union finance minister and finance ministers of states are its members.

An official statement issued after the 45the meeting of the GST Council on September 17, 2021, specified the purpose of constituting the group: “The Council decided to set up a GOM to examine the issue of correction of inverted duty structure for major sectors; rationalize the rates and review exemptions from the point of view of revenue augmentation, from GST.”

According to experts, this is not the right time to rationalise GST rates due to global supply chain disruptions and rising prices of various commodities. “Inflation is already high. It is, therefore, unlikely that both states as well as the Central governments would like to take any decision that would raise GST rates. A similar move for textiles was also deferred day before its implementation,” one person with direct knowledge of the matter said requested anonymity.

At the 45th meeting of the GST Council on September 17 last year, the apex body on indirect tax matters decided to set up a group of ministers (GOM) to examine ways to rationalise tax rates and review exemptions to augment revenues. That day, the Council had also decided to correct duty inversions in textile and footwear sectors from January 1, 2022, which would have put most of these products in the higher GST slab. But, just a day before the implementation of the decision, the 46th meeting of the apex body was called on December 31, 2021 to defer its earlier decision of raising GST rates on textile items.

The 46th meeting of the GST Council was convened on a short notice under the “emergency provisions” after Gujarat approached its chairperson with a proposal to defer the September 17, 2021 decision to put certain textile items under a higher tax slab to correct inverted duty structure.

EXPERTS SAY

THIS IS NOT THE RIGHT TIME TO RATIONALISE GST RATES DUE TO SUPPLY CHAIN DISRUPTIONS