The Finance Ministry has set up two committees of State finance ministers which would rework rate slabs, review Goods and Services Tax (GST) exempt items and identify potential evasion sources. Four years after the rollout of the national GST, which replaced the complex indirect tax structure, the Centre and States have started work on moving towards a “simpler rate structure in GST” by reviewing the current rate slabs, including special rates and merger of rate slabs. 

The Group of Ministers (GoM) on rate rationalisation would also review items under inverted duty structure to help minimise refund payout and review the supply of goods and services exempt under GST with an objective to expand the tax base and eliminate breaking of input tax credit (ITC) chain. 

The seven-member panel, which would submit a report in two months, would be headed by Karnataka Chief Minister Basavaraj Bommai and include West Bengal Finance Minister Amit Mitra, Kerala Finance Minister K N Balagopal and Bihar Deputy Chief Minister Tarkishore Prasad. The GoM on GST system reforms would identify potential sources of evasion and suggest changes in business processes and IT systems to plug revenue leakage. 

The eight-member panel on GST reforms, headed by Maharashtra Deputy Chief Minister Ajit Pawar, would include Delhi Deputy Chief Minister Manish Sisodia, Tamil Nadu Finance Minister Palanivel Thiaga Rajan and Chhattisgarh Finance Minister T S Singh Deo. 

Under GST, a four-rate structure exempts or imposes a low rate of tax of 5 per cent on essential items and a top rate of 28 per cent on cars is levied. The other slabs of the tax are 12 and 18 per cent. Besides, a cess is imposed on the highest slab of 28 per cent on luxury, demerit and sin goods. There have been demands for merging the 12 and 18 per cent slabs as also take out certain items from the exempt category to balance the impact of slab rationalisation on revenue.