GST Rate Rationalisation and Policy Challenges Ahead

The upcoming GST Council meeting on June 22 holds significant importance, marking the first session since the NDA government’s return and amid a diminished BJP mandate in the Lok Sabha.

Key agenda items include reviewing GST rates on online gaming, potential inclusion of petroleum products, electricity, and real estate under GST, and considering rate rationalisation. Traditionally, the Centre holds one-third of Council votes, with states collectively wielding two-thirds, emphasizing states’ pivotal role in policy decisions. However, with perceptions of a weakened Centre under a coalition government, deadlock on crucial issues is anticipated.

Rate rationalisation, particularly merging existing slabs, remains contentious amid concerns over impacting lower-income groups. Additionally, the treatment of petroleum products, currently excluded from GST, adds complexity due to varied state tax regimes and significant revenue implications.