NEW DELHI: Amid the demand for fewer slabs of GST, several states, including Opposition-ruled West Bengal and Karnataka, do not see any need to reduce them from the current four, with a ministerial panel set to review representations from insurance, online gaming, restaurants and beverage sectors for lowering of rates.
While the demand for lowering GST on health insurance from the current 18% came up during the first meeting of the group of ministers (GoM) on rate rationalisation on Thursday, the matter has been referred to the fitment committee, comprising officers, which will come back with its analysis."Some GoM members are demanding that there should be no change in tax slabs under GST. More discussions will happen, and then only a final decision will be taken," Bihar deputy CM Samrat Chaudhary, the convenor of GoM, said after the meeting. The GST Council is due to meet on Sept 9, where the issue of rate rationalisation is likely to figure but Thursday's talks indicate that discussions would drag on for a while.While there was discussion on reducing the slabs from four to three, there was no consensus on the matter. Currently, there are four main slabs - 5%, 12%, 18% and 28%.
West Bengal FM Chandrima Bhattacharya said she has suggested that there should not be any change in the slabs and a presentation will be made to the GST Council. Karnataka revenue minister Krishna Byre Gowda said GST has broadly stabilised. "Why disturb something which is going on smoothly," he said.Reducing the slabs from four to three will require merging the 12% and 18% slabs and converging them around 15-16%. It will mean that products in the 12% bracket - including butter, ghee, computers, mobiles, umbrellas and hotels with room rent up to 7,500 a night, among others - will face a higher levy. Besides, there may be a requirement to increase the rate in the lowest slab, which may not be politically palatable.
A review of rates on restaurants, beverages and online gaming sectors demanded by industry will also be taken up by the GoM and some could be sent to the fitment committee, Chaudhary said.
The GST Council will also discuss phasing out of compensation cess on products, such as tobacco, automobiles, beverages and coal, which was extended up to March 2026 but may not be needed from late 2025. The cess was originally in place for five years but had to be extended to recover the borrowings during Covid-19.