Home / Economy / GST exemption items: Govt sets up ministerial panels to review tax slabs

The Finance Ministry has set up two committees of state finance ministers which would rework rate slabs, review GST exempt items and identify potential evasion sources.

The seven-member panel, which will be headed by Karnataka Chief Minister Basavaraj Bommai and includes West Bengal Finance Minister Amit Mitra, Kerala Finance Minister K N Balagopal, and others would review the supply of goods and services exempt under GST with an objective to expand the tax base and eliminate breaking of ITC chain.

It would also review the current tax slab rates and recommend changes in the same.

The Group of Ministers (GoM) on rate rationalisation would also review items under inverted duty structure to help minimise refund payout, and review the supply of goods and services exempt under GST with an objective to expand the tax base and eliminate breaking of input tax credit (ITC) chain.

The Finance Ministry said the GoM may suggest changes that may be implemented immediately and the roadmap for implementation of changes will be in the short to longer term. The panel can also submit interim report for immediate recommendations.

Four years after the roll out of the national Goods and Services Tax (GST), which replaced the complex indirect tax structure, the centre and states have started work on moving towards a "simpler rate structure in GST" by reviewing the current rate slabs, including special rates and merger of rate slabs.

Under GST a four-rate structure that exempts or imposes a low rate of tax 5 per cent on essential items and top rate of 28 per cent on cars is levied. The other slabs of tax are 12 and 18 per cent. Besides, a cess is imposed on the highest slab of 28 per cent on luxury, demerit and sin goods.

There have been demands for merging the 12 and 18% slab as also take out certain items from the exempt category to balance the impact of slab rationalisation on revenue.

With regard to inverted duty structure, the GST Council has already corrected the rate anomaly in case of mobile handset, footwear and textiles. The ministerial panel would now look at representations of inverted duty structure and recommend suitable rates to eliminate any such cases where final goods attract a lower GST than the tax levied on its inputs.

Apart from that, the finance ministry also constituted another GoM on GST system reforms to identify potential sources of evasion and suggest changes in business processes and IT systems to plug revenue leakage.

The eight-member panel, headed by Maharashtra Deputy Chief Minister Ajit Pawar, would include Delhi Deputy Chief Minister Manish Sisodia, Tamil Nadu Finance Minister Palanivel Thiaga Rajan and Chhattisgarh Finance Minister T S Singh Deo.

The panel, which would give its recommendation to the council from time to time, would review IT tools and interface available with taxmen and suggest ways to make them more effective, identify possible use of data analysis towards better tax compliance and suggest ways of better coordination between central and state tax officers.

The decision to set up these two GoMs was taken by the GST Council, chaired by Union Finance Minister Nirmala Sitharaman, on September 17.

(With inputs from PTI)

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