The Group of Ministers (GoM) on GST rate rationalisation is expected to recommend a significant overhaul of the current GST structure, including proposals to eliminate the 12% and 28% tax slabs, according to sources. The move aims to simplify the tax regime and bring about a comprehensive item-wise rate revision across multiple sectors.
According to sources, the Centre’s proposal includes a reduction of GST rates on several key items while hiking rates on others, marking a major reclassification intended to balance revenue and growth considerations.
Key highlights of the Centre’s proposal include:
- Fertiliser sector: GST on fertiliser acids and bio-pesticides is proposed to be slashed drastically from 18% and 12%, respectively, to a uniform 5%, easing the tax burden on essential agricultural inputs.
- Coal and solid fuels: Taxes on coal, briquettes, and solid fuels derived from coal, lignite, and peat are likely to see a significant hike from the current 5% slab to 18%, reflecting a shift in revenue priorities.
- Renewable energy: Items in the renewable energy sector such as solar cookers, solar water heaters, and related energy devices and parts are proposed to get a boost with rates coming down from 12% to 5%, promoting green energy adoption.
- Textile industry: Synthetic or artificial filament yarns, sewing threads, yarn of manmade staple fibres, felt, gimped yarn, metalised yarn, rubber thread, carpets, and gauze are expected to have their GST rates reduced from 12% to 5%, providing relief to the textile sector.
- Apparel sector: A key highlight is the proposed increase in the price threshold for apparel attracting 5% GST from ₹1,000 to ₹2,500. Readymade garments exceeding ₹2,500 may attract an 18% GST, up from the existing 12%, aimed at better tax alignment with product value.
- Footwear: For footwear, the proposal seeks to lower GST from 12% to 5% for items priced below ₹2,500, while items exceeding this threshold could see an increase from 12% to 18%.
The GST Council is slated to meet on September 2-4, where the final decision on these proposals will be taken.
