The Group of Ministers (GoM) on GST rate rationalization has decided to make changes to tax rates on various items. They have proposed lowering the tax rate on 20-litre packaged drinking water bottles, bicycles, and exercise notebooks to 5 per cent. This decision is expected to result in a revenue gain of Rs 22,000 crore.
The GoM has recommended reducing the GST on packaged drinking water of 20 litres and above from 18 per cent to 5 per cent. Similarly, the GST on bicycles costing less than Rs 10,000 will be reduced to 5 per cent from 12 per cent. Additionally, the tax on exercise notebooks will also be decreased to 5 per cent from 12 per cent.
On the other hand, the GoM has suggested increasing the GST on high-end wrist watches and shoes priced above Rs 15,000 and Rs 25,000 respectively, from 18 per cent to 28 per cent.
In a previous meeting, the GoM discussed tweaks in tax rates for over 100 items to provide relief to the common man. The current GST structure has four tiers with slabs at 5, 12, 18, and 28 per cent.
The average GST rate has fallen below the revenue neutral rate of 15.3 per cent, prompting the need for discussions on GST rate rationalization. Luxurious and sin goods attract the highest slab of 28 per cent and may incur additional cess.
The decision of the GoM will now be presented to the GST Council for further approval.
