Merger of 18% and 12% GST Slabs likely to Take Longer

The meeting’s agenda will be ready by Tuesday, a government official, one of the three cited above, said on condition of anonymity.

While the plan to merge the two slabs of 12% and 18% is under consideration for several months, this will imply a change in the design of the GST structure itself and impact some of the goods, said a second official with a state government.

While a merged GST rate somewhere in the middle could reduce the number of slabs and lower the tax burden on items in the 18% rate, it could lead to a higher burden on items that fall in the 12% slab, which includes certain medical equipment, medical-grade oxygen and processed food.

The Council had approved that borrowing arrangement only for FY21. Continuing the same in the current fiscal also means that the cess will stay for a longer period.

States such as Odisha, Punjab and West Bengal have been drawing the Centre’s attention to GST issues that need to be discussed urgently.

Odisha chief minister Naveen Patnaik wrote to Union finance minister Nirmala Sitharaman earlier this month seeking GST exemption to covid-19 vaccines and fiscal support to states to fight the pandemic.

Punjab finance minister Manpreet Singh Badal has expressed displeasure at the fact that important rule changes such as restricting input tax credits were being taken by a panel of officers without discussions in the Council.

Badal has sought a discussion on how to create an environment of “terror-free GST compliance".

With states having a long list of grievances, Friday’s virtual meeting of the Council could be a lengthy affair, said a third official, who also spoke on condition of anonymity.

An email sent to the Union finance ministry seeking comments for the story remained unanswered till press time.