GoM set to reconsider GST Rate Rationalisation

The Union government has reconstituted the ministerial group of the GST Council that was tasked with recommending the simplification of the complex tax structure and a rejig of its multiple rates. The group, tasked with simplifying the intricate tax structure and reorganizing its multiple rates, was in a state of suspension since the Karnataka assembly polls in May. Despite earlier indications that the GST rate rejig was on hold, the reconstituted group includes Karnataka’s Revenue Minister Krishna Byre Gowda.

However, the convenorship now rests with Uttar Pradesh Finance Minister Suresh Kumar Khanna. While the GST structure officially comprises four main rate slabs (5%, 12%, 18%, and 28%), the practical implementation involves about a dozen different rates, including a zero rate for some goods. Complexity is further added as tax rates for certain items depend on factors like packaging or selling prices.

Tax experts and industry leaders have been urging the government to revive the stalled rate rationalization plan, particularly as GST revenues have stabilized at over ₹1.6 lakh crore in recent months. The GoM, with unchanged terms of reference, may also provide recommendations on the future of the GST Compensation Cess.

In its previous meeting in October, the GST Council initiated discussions on a “perspective plan” to introduce a cess or surcharge on top of GST levies after the expiry of the GST Compensation Cess in March 2026. In June 2022, the GST Council accepted some of the GoM’s recommendations to withdraw exemptions and concessional rates on various items. Finance Minister Nirmala Sitharaman, at that time, extended the ministerial panel’s mandate by three months to recommend a broader overhaul of GST rates.

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