GST Council's key state panel for rate changes may face another revamp

In the last reorganisation of this panel, at the GST Council meeting on June 22, Bihar Deputy Chief Minister Samrat Chaudhary was appointed as its convenor

The rationalisation of the goods and services tax (GST) regime may take longer than expected, as another reshuffle of a panel comprising state ministers, responsible for recommending rate changes, looms on the horizon, according to official sources. This potential shake-up may involve the panel’s convenor.  

High-level government sources revealed a proposal to replace Goa’s Transport Minister, Mauvin Godinho, with Chief Minister Pramod Sawant on the seven-member panel.  This comes after the most recent reorganisation during the GST Council meeting on June 22, when Bihar Deputy Chief Minister Samrat Chaudhary was appointed the panel’s convenor. The panel was expected to convene in the coming days to propose adjustments to the GST rate structure, which the GST Council would then review after the Budget.

“There could be the possibility of a change in the convenor of the panel due to hierarchy issues. However, any such decision will be taken by the GST Council,” an official source privy to the matter told Business Standard. If necessary, the respective states could seek the Council’s intervention in reorganising the panel, the source explained.

An email to the finance ministry went unanswered, and Godinho did not respond to text messages.

“When we meet in the next GST Council meeting, we will start a discussion on rate rationalisation… There will be a presentation by the GoM (group of ministers) irrespective of whether the report is draft, and then the Council will start the discussion on rate rationalisation in the next meeting in August,” Union Finance Minister Nirmala Sitharaman had said after a recent meeting of the Council.

Chaudhary has replaced Uttar Pradesh Finance Minister Suresh Khanna. Other panel members include Rajasthan Medical and Health Services Minister Gajendra Singh, West Bengal Finance Minister Chandrima Bhattacharya, Karnataka Revenue Minister Krishna Byre Gowda, and Kerala Finance Minister K N Balagopal.

The seven-member GoM is responsible for suggesting necessary rate rationalisations and correcting the inverted duty structure to simplify the rate structure, review the GST exemption list, and enhance GST revenues.

First formed in 2021, the state ministers panel was reconstituted in November 2023 after its then-head, Basavaraj S Bommai, lost the Karnataka Assembly elections. Another reorganisation followed when former Bihar Finance Minister Vijay Kumar Chaudhary left his position.

Meanwhile, the fitment committee under the GST Council, comprising central and state officials, has started a fresh rate rationalisation exercise, examining the possibility of dropping some rates, particularly the 12 per cent slab, to achieve a revenue-neutral structure. The group of ministers on rate rationalisation is expected to submit its recommendations and final report in three to four months, following the status report.

The current rate structure includes standard rates of 5 per cent, 12 per cent, 18 per cent, and the highest rate of 28 per cent.

In a fix

> Reorganisation could change panel’s composition, which could delay panel meetings

> Discussion on reorganisation emerged after proposal to appoint Goa CM Pramod Sawant in the GoM 

> Panel was asked to submit status report on rationalisation in next Council meeting

GoMs tasked to:

> Suggest required rate rationalisation

> Correction of inverted duty structure

> Reviewing GST exemption list

> Enhancing revenues from GST