GST Council weighs rate rejig to lift consumption

Council may drop 12% slab, shift several items to 5%, and others to 18%

- Gireesh Chandra Prasad

After the Union government reduced the tax burden on individuals and the central bank followed with an interest rate cut, it's over to the states now.

The Goods and Services Tax (GST) Council may reduce tax rates on some items to deliver a consumption boost, while remaining mindful of the revenue requirements of the Centre and states, two persons familiar with the discussions in the Council said.

The federal indirect taxes body may also end the 12% slab, and move items in that slab to the 5% slab and where essential, to the 18% slab, said one of the two persons quoted above.

This will deliver a consumption stimulus, while also helping to simplify the tax structure, said the person, who spoke on the condition of not being named.

Substantial amount of work has already happened in this respect, said the person.

A second person, who also spoke on the condition of not being named, said the Centre's suggestions have been placed before a group of ministers led by Bihar deputy chief minister Samrat Chaudhary. "The consideration of balancing the rate cut with moving certain items to the higher slab where it is justified has also been conveyed," said the person.