Government Puts GST Rate Tweaks on Hold Due to Inflation

GST Rate

The rate rationalization is expected to be delayed due to inflationary pressure and geopolitical tension, said a senior finance ministry official. However, the group of ministers (GoM) is yet to finalize its report.

Both the Centre and states agree that it may not be the right time for such an exercise given India’s high inflation. Fewer slabs would mean that GST on some items could go up, which could make goods expensive at a time when consumer inflation has touched an eight-year high of 7.79%. While, most essentials are in the 5%slab. “Rate rationalization is difficult with inflation at this level and has to wait till the situation improves,” official added.

The council had set up a group of ministers (GoM) last year to suggest changes to the GST rate structure. It was tasked with suggesting rate changes to correct inverted duty structures and also to reduce the number of GST slabs from the existing 5%, 12%, 18% and 28% to just three.

The GST Council is likely to meet in June. GoM has also reported to favour the highest 28% rate on online gaming, racing and casinos. The council is also expected to discuss integrated GST on ocean freight, struck down by the Supreme Court in a recent order.


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