The GoM’s main mandate is
to review the current tax slab rates, and recommend
changes as needed to garner more resources, as the
five-year GST compensation mechanism comes to an end
While a much-awaited comprehensive restructuring of the GST slabs to raise the
revenue-neutral rate (RNR), from a little over 11% now to 15.5%, may take some
more time due to inflationary concerns, the GST Council could consider raising
the GST on online gaming from 18% to 28%, to bring the skill-game tax rate at
par with chance games involving gambling and betting, sources said. The GST
Council s likely to meet by end-June.
There are four major GST slabs now — 5%, 12%, 18% and 28%. A clutch of demerit
goods in the 28% bracket also attracts cesses, the proceeds of which go to a
separate fund meant to compensate states for the revenue shortfall.
The Bommai-led GoM will consider the merger of tax rate
slabs, required for a simpler rate structure in GST.
Given the slab rejig is a complex exercise involving,
among other things, correction of inverted duties in
many value chains, the GoM will likely be given
additional time, another source had said recently.
The council had to drop a plan to hike the GST rates for
most textile products in the man-made fibre value chain
from 5% to 12% in late December 2021, to correct the
inverted duty structure, amid protests from the industry
from Gujarat and other states. The GoM will revisit the
Based on the recommendation of the GoM, the council may
eventually shift items under the 12% and 18% slabs to a
new median slab of 15%. The 5% rate may be replaced by a
new rate, which will be 6% or 7%, but the rate tweaking
will be done in a manner that finally creates a
In the meantime, officials are banking on the
continuation of the buoyancy in GST collections and
anti-evasion measures to narrow the likely shortfalls in
Under the GST compensation mechanism, which is
constitutionally guaranteed, state governments are
assured 14% annual revenue growth for the first five
years after the tax’s July 2017 launch.