Group of Ministers on GST rationalisation proposes lowering tax rates on bicycles, packaged drinking water bottles, notebooks to 20%

The GoM, led by Bihar Deputy Chief Minister Samrat Chaudhary, expects these changes to result in a revenue gain of Rs 22,000 crore, reported PTI.

Specifically, the GST on 20-litre and above packaged drinking water bottles is proposed to be lowered from 18 percent to 5 percent.

Similarly, bicycles costing under Rs 10,000 would see a GST reduction from 12 percent to 5 percent if the recommendation is approved by the GST Council.

Exercise notebooks would also have their GST rate cut from 12 percent to 5 percent.

On the other hand, the GoM suggested increasing GST on shoes priced above Rs 15,000 per pair and wristwatches above Rs 25,000 from 18 percent to 28 percent.

During their previous meeting, the GoM discussed tax adjustments for over 100 items, including lowering rates on several goods from 12 percent to 5 percent to provide relief to consumers.

Items currently in the 18 percent GST slab, such as hair dryers, hair curlers, and beauty or make-up products, could potentially be shifted back to the highest 28 percent tax bracket.

The six-member GoM includes Uttar Pradesh Finance Minister Suresh Kumar Khanna, Rajasthan Health Services Minister Gajendra Singh, Karnataka Revenue Minister Krishna Byre Gowda, and Kerala Finance Minister K N Balagopal.

GST is structured with four tax slabs: 5, 12, 18, and 28 percent.

Essential items either fall under the lowest tax slab or are exempted, while luxury goods and demerit items are taxed at the highest 28 percent slab, often with an additional cess.

The average GST rate has fallen below the revenue-neutral rate of 15.3 percent, requiring discussions on rationalising the tax structure.