BENGALURU: Chief Minister Basavaraja Bommai here on Saturday chaired the second meeting of the Group of Ministers (GoM) on GST rationalisation. Critical issues, from the merger of tax slabs to simplifying taxation to seeking the continuation of compensation to states were discussed at the meeting, sources said.
As the GST regime completes five years in July 2022, the compensation to states against tax losses will come to an end. Recommendations by the Bommai-led GoM will play a crucial role when that situation emerges. But there will be clarity only after the conclusive meeting in New Delhi in the last week of November. The proposals will be sent to the GST Council, which will take the final decision, the sources added.
The GST regime that is being worked out could have three slabs instead of four, as there is a proposal to merge the 12 per cent and 18 per cent slabs for the most commonly used commodities and to peg it at 16 per cent.
Unlike the preliminary meeting on November 12, which was held virtually, Saturday’s meeting was attended physically by finance ministers of Goa, Bihar, Rajasthan, West Bengal, Uttar Pradesh and Kerala, who are members of the GoM.
They felicitated Bommai, who will have a collaborative say when he submits the group’s recommendations to the Council, which is headed by Union Finance Minister Nirmala Sitharaman. The rate rationalisation includes correction of inverted duty structure to simplify the rates to reduce classification-related disputes and enhance GST revenues. The Council has already approved it in many sectors, including textiles and footwear, which will be implemented from January 1, 2022.
The GST Council constituted GoM on September 24, 2021 to restructure the tax system with Bommai as chairman and had set a two-month deadline to give its recommendation. The trade and commerce sector has reportedly pinned its hopes on Bommai to simplify GST. Bommai attended GoM even when he was the home minister as then chief minister BS Yediyurappa had deputed him to attend the meetings.