The Group of Ministers (GoM) on GST rate rationalisation has proposed significant adjustments to tax rates, which could result in a revenue gain of ₹22,000 crore for the government. In their latest meeting, the GoM recommended reducing GST rates on essential items like 20-litre packaged drinking water bottles, bicycles under ₹10,000, and exercise notebooks to 5% from 18%. These changes are expected to lower the tax burden on essential consumer goods.
Conversely, the GoM suggested increasing the GST on luxury items such as high-end wristwatches (priced over ₹25,000) and shoes above ₹15,000 from 18% to 28%, aligning them with the top-tier tax bracket. The committee, chaired by Bihar Deputy Chief Minister Samrat Chaudhary, aims to balance the tax structure to boost revenue while rationalising rates for consumer essentials.
This move comes as part of an effort to address the falling GST revenue, which dipped below the revenue-neutral rate of 15.3%. Other luxury items like hair dryers, beauty preparations, and hair curlers could also see an increase to the 28% GST slab, while essential products receive relief.
These changes are subject to approval by the GST Council but reflect the GoM’s focus on aligning GST rates to better reflect consumer spending patterns and boost overall tax collection.
