Tue Dec 03 10:04:28 UTC 2024: ## GST Council to Consider Major Tax Overhaul Affecting 148 Goods

**Jaisalmer, Rajasthan:** A major restructuring of India’s Goods and Services Tax (GST) is on the horizon, with the Group of Ministers (GoM) proposing significant changes to the tax rates on 148 goods. The recommendations, to be discussed at the 55th GST Council meeting on December 21st, aim to create a more equitable and simplified tax system.

The proposed changes include a tiered GST structure for readymade garments: 5% for garments up to ₹1,500, 18% for those between ₹1,500 and ₹10,000, and 28% for garments costing over ₹10,000. A significant increase is also proposed for “sin goods” such as aerated drinks, tobacco, and cigarettes, with a new 35% GST rate under consideration.

Conversely, the GoM recommends reducing GST on essential items to ease the burden on consumers. This includes lower rates for exercise books and bottled water. However, luxury items will see a tax hike. Wristwatches above ₹25,000 and shoes above ₹15,000 will fall under higher GST brackets, aligning them with other luxury goods. Similarly, large packs of bottled water (20 liters or more) and health insurance premiums will see a reduction from 18% to 5%.

The GoM’s proposals are expected to boost government revenue by increasing taxes on luxury goods while simultaneously reducing them on essential items. The Council, chaired by Union Finance Minister Nirmala Sitharaman, will decide on the final tax structure through consensus; voting will be used only if necessary. The central government holds one-third of the voting power, while state governments hold two-thirds.

Finally, the GoM will submit a report by December 31st proposing a replacement for the compensation cess, which is set to be abolished. This forms part of the ongoing comprehensive tax reforms.

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