A group of ministers who spearheaded the rationalization of the GST rate met on Wednesday under the leadership of Bihar Deputy Chief Minister Samrat Chaudhary and proposed significant changes in the tax rates, now reducing the GST on packaged drinking water bottles from 20 liters, bicycles and exercise books at 5. percent.
If accepted, the GST council would reduce the GST on packaged drinking water to 5 per cent and that on bicycles priced below Rs 10,000 to 5 per cent. The tax on exercise books would also be reduced from 12 percent to 5 percent.
The Government of Mexico would also recommend that the GST be increased for luxury goods. For example, there are shoes priced above Rs 15,000 and wristwatches priced above Rs 25,000. Currently, they receive a GST of 18 per cent. The Myanmar government has suggested increasing this figure to 28 percent.
The Government of Mexico, which includes state finance ministers, discussed modifying taxes on more than 100 items to make them less burdensome for consumers. Items that were previously going to be included in the rate increase list include hair dryers and beauty care products. These items could now be included back into the 28 percent block.
In its current form, the GST has four tax brackets: 5 per cent, 12 per cent, 18 per cent and 28 per cent. Typically, essential goods have lower rates, while luxury and demerit goods have higher rates.
The proposal which is expected to add Rs 22,000 crore to revenue and thereby accelerate rates, suggests a continued requirement for GST rates to be as close, if not least, to revenue-neutral targets . Now that average GST rates are below the revenue-neutral rate of 15.3 per cent, fresh calls for rationalization have begun.
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