The GST Group of Ministers (GoM) on rate rationalisation has finalised its report recommending sweeping changes to tax rates on 148 items, including a significant overhaul for the textile sector. The rate changes will be revenue-positive and are likely to be discussed in the upcoming GST Council meeting on December 21, three sources said.
“The GoM has kept in mind to lower the rates for items in textile, bicycle, exercise books which are of common man’s use. While the rate on several luxury goods has been proposed to be increased to 28 percent,” a source said.
Textiles
“The GoM has suggested a revised slab structure that keeps the 5 percent rate for textile items up to Rs 1,500 but proposes an 18 percent tax for products priced between Rs 1,500 and Rs 10,000. For textiles priced above Rs 10,000, the report recommends a hike to 28 percent, aligning them with luxury goods,” another source said.
Currently, the GST rate structure for textiles applies a 5 percent tax on items priced up to Rs 1,000 and a 12 percent tax on those priced above Rs 1,000.
The GoM chaired by Deputy Chief Minister of Bihar Samrat Chaudhary met on December 2 and agreed on several GST rate changes designed to simplify the GST framework and enhance revenue collection. The report is set to be presented at the 55th GST Council meeting scheduled for December 21 in Jaisalmer, chaired by Finance Minister Nirmala Sitharaman, a third source said.
The GoM has suggested raising GST rates on several luxury items, including high-end wristwatches and shoes. Meanwhile, to make essential products more affordable, the group has proposed reducing GST on items such as bicycles, exercise books, and large packs of packaged drinking water.
Increase in GST for Luxury Goods
The GoM has proposed to increase the GST rate on wristwatches priced above Rs 25,000 from 18 percent to 28 percent. Similarly, shoes costing over Rs 15,000 will also see a tax hike, with the rate going from 18 percent to 28 percent.
Reduction in GST on Essential Goods
On the other hand, in a bid to provide relief on everyday essential items, the GoM has proposed lowering the GST on bicycles priced below Rs 10,000 from 12 percent to 5 percent. Exercise books and packaged drinking water above 20 liters would also see a reduction in GST from 12 percent and 18 percent, respectively, to 5 percent.