GST Rate Reduction Not on the Horizon, Confirms Finance Ministry
On Monday, the Ministry of Finance unequivocally ruled out any immediate reduction in Goods and Services Tax (GST) rates as a means to alleviate consumer burdens. The ministry noted that decisions regarding GST rates fall within the jurisdiction of the GST Council, which is currently awaiting a pivotal report on rate rationalization.
During a response to an unstarred question in the Lok Sabha, Minister of State for Finance, Shri Pankaj Chaudhary, emphasized that GST rates are determined by the GST Council—a constitutional body representing both the Centre and the States/Union Territories. Addressing a query from Samajwadi Party MP, Shri Ujjwal Raman Singh, regarding possible GST rate reductions for the benefit of the common man, the Minister stated:
“GST rates are prescribed on the recommendations of GST Council, which is a constitutional body comprising of representatives from States/UTs and Centre. In its 45th meeting held on September 17, 2021, the GST Council has constituted a Group of Ministers (GoM) on GST Rate Rationalisation. The Group of Ministers have not submitted its report to the Council.”
In light of the absence of the GoM’s recommendations, the Minister concluded that questions concerning the magnitude of any proposed rate cuts or their timelines “do not arise.” This clarification comes amidst growing consumer demands for tax relief, particularly in the context of ongoing inflationary pressures.
Expectations for a possible revision in GST rates had recently surged following reports that the GoM on rate rationalization might be contemplating a comprehensive overhaul of the existing multi-slab structure to enhance efficiency and equity. The current GST framework operates with four primary tax slabs—5%, 12%, 18%, and 28%—alongside special rates for certain goods and services.
Over the years, numerous stakeholders, including industry bodies and policy experts, have urged the Council to simplify the GST structure by merging tax slabs and addressing inverted duty anomalies. The rate rationalization initiative, which began in 2021, has faced delays due to political transitions in several states and changing economic conditions. The recommendations from the GoM are anticipated to play a crucial role in shaping the future landscape of GST reforms.