GST rates could change to correct inverted duty, exemptions: Report

Group of ministers headed by Karnataka Chief Minister Basavaraj Bommai is working on the second round of GST rate changes, a news report said

The Goods and Services Tax (GST) Council may make rate changes in some services or products and withdraw some exemptions in a bid to correct instances of inverted duty, The Economic Times reported on Tuesday. 

A group of ministers (GoM) headed by Karnataka Chief Minister Basavaraj Bommai is working on the second round of GST rate changes, reported ET quoting sources. 

"The inverted duty correction exercise has not concluded yet and there is more work left," a senior official told the newspaper. The official said that the GoM is working on the next list and a proposal for the same may be floated before the council in the next meeting, which will likely be held in September. 

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"The last two-three meetings were productive, with many important decisions being taken. But some items are still pending, including textiles," said the official.

If required, tax authorities will engage with the industry for feedback on rate changes correction in the inverted duty structure, the official told ET.

The GST Council, in its 45th meeting in September 2021, had rectified the inverted duty structure for the footwear and textiles industry with effect from January 1, 2022. The council had revised the duty on footwear and finished apparel of any value to 12 per cent from an earlier GST rate of 5 per cent for sale value up to Rs 1,000 per piece for apparel and per pair for footwear. 

While experts had hailed the council's move, traders and manufacturers opposed it, saying the rate hike would hit the nation's textile industry and result in job losses. Many trader organisations and states had also demanded a rollback of the rate hikes.

Owing to opposition on rate hike, the GST Council, a day before the change was to come into effect, had rolled back the revision.
 

However, barring textiles, the council has continued to correct duty inversion.