Union Minister Amit Shah to lead talks with the state ministers and the central ministers on the long pending issues on Goods and Services Tax (GST) reforms
The aim is to scrap the 12 per cent tax slab, and either reduce it to 5 per cent or increase up to 18 per cent. The Finance Ministry has already discussed with the Home Ministry and is expecting Amit Shah to take up a big role, and will help to build consensus among all parties before changes are proposed in the GST council. Also earlier Shah has been involved in economic decisions like raise in prices in key food items and disinvestment.
Shah’s intervention was necessary as these long pending issues are politically sensitive.
“This simplification in the rate structure could result in significant revenue losses up to Rs 70,000 – 80,000 crores.” according to sources.
Sources said Shah’s intervention was required to resolve “politically sensitive issues”.
Two opposition ruled states also demanded the GST rate on life and health insurance premiums to be cut to 5 per – cent from 18 per cent, several other states wants no tax on premiums.
Although, in its 55th meeting in December 2024, the council decided to postpone the decision on the cut of GST on life and health insurance premiums.
GST, introduced in 2017, has multiple slabs – 0%, 5%, 12%, 18% and 28% – plus cess for luxury and sin goods. Efforts to simplify these rates have failed before due to lack of agreement within the GST Council.
According to 2023-24 data, items in the 12 per cent tax group contribute 5-6 per cent of the total revenue, which includes items like medical items — medical grade oxygen gauze, bandages, diagnostic kits; household goods such as — cotton, jute bags, furniture, some textile products; food items like — nuts, dates, condensed milk, fruit juices.
“A lot of factors will be in consideration, and the revenue loss is a big factor. No state will accept the proposal easily, so the Home Minister plans to hold discussion with the states beforehand” quoted by source.
Report says any changes in the revenue structure would require multiple council meetings and can take some time.
