On Thursday, the relevant Group of Ministers (GoM) supported the removal of the Goods and Services Tax (GST) slabs of 12% and 28%, with certain recommendations. Following Prime Minister Narendra Modi’s statement on Independence Day to rationalize the indirect tax system, it now heads to the GST Council for final review.
Only the 5% and 18% slabs of the current four will remain when the GST Council approves the change; a 40% slab for ultra-luxury products may also be added.
Questions about the states’ share and compensation for income loss will be considered by the GST Council, which is chaired by Union Finance Minister Nirmala Sitharaman and includes ministers from every state.
“Everyone contributed their ideas to the Center’s initiatives.” There are a few observations for some states. “This has been referred to the GST Council,” stated Samrat Choudhary, the deputy chief minister of Bihar and the convener of the GST Council-established GoM on Compensation Cess, Health and Life Insurance, and Rate Rationalisation.
“Uncertain about revenue loss and state compensation.”
“I brought up in the meeting that if the states are going to lose the revenue… then we want to know how we will be compensated,” Chandrima Bhattacharya, the health minister for West Bengal, said to reporters. With our concerns noted, the GoM will now forward its report to the GST Council.
“We don’t know what the revenue loss is from this GST rate cut,” she continued. They haven’t made an assessment yet. We will learn more in the GST Council.
Uttar Pradesh Finance Minister Suresh Khanna also told PTI that the presentation at the Center failed to mention the extent of the loss. However, we contend that the general public should benefit from this.
The decision to remove the 12% and 28% tax bands was made by Prime Minister Modi on August 15 from the Red Fort as part of a larger initiative to streamline the tax system and reduce confusion.
