GST Slab: The group of ministers is conducting an in-depth review of rates across several categories, including products in the 12% and 18% brackets, and will decide on several products and services by the end of September. As far as rationalising GST rates is concerned, the group of ministers has probably shelved the plan to redraw the slabs. According to sources, the review of rates may include sectors such as health insurance and restaurants, as well as some food products, where branded and packaged goods and loose goods have different rates.
Most goods and services in the 12% bracket
According to TOI sources, despite a large number of items being in the 12% bracket, not much revenue is coming from this slab. On the contrary, 73% of taxes come from the 18% bracket. Even a three percent reduction in the slab can lead to a major drop in revenue. Government sources told TOI that given the current political environment, it is difficult for ministers to increase tax on items with a 12% rate.
Chances of no change in slab
A majority of ministers in the group formed on rationalisation of rates, with Bihar Deputy Chief Minister Samrat Choudhary as the convenor, opted not to make any changes in the slabs. The decision is likely to be conveyed in the GST Council meeting on September 9. Other rate changes focused on specific goods and services will be worked out in the coming weeks and then considered by the GST Council.
What will be the impact of this new change in GST law on businessmen
Demand for online gaming companies
However, there is a strong lobby from online gaming companies demanding a review of the 28% tax that was discussed by the GST Council while fixing the rate. An immediate change is unlikely given the stance taken by several states and the Centre, which argue that many gamers are losing large amounts of money and the tax should act as a deterrent.
Similarly, the demand of the beverage industry may be linked to the larger issue of deciding the future of compensation cess. The industry demands that instead of frequent changes, the change in rates should be limited to twice a year, so that the seller does not suffer losses due to change in duty after the supply of goods and services.