CII Seeks Early GST Rate Rationalisation and Simplification in FM Meeting

CII Calls for Urgent Reforms Before GST Council Meeting
Ahead of the upcoming GST Council meeting, industry body CII (Confederation of Indian Industry) met with Finance Minister Nirmala Sitharaman on Tuesday. During the meeting, CII emphasized the urgent need to conclude the rate rationalisation process, according to sources.

Key Recommendations by CII
In its proposal for further GST reforms, CII made several suggestions:

Include all petroleum products under GST

Ease input tax credit (ITC) conditions to improve working capital

Streamline the audit process to reduce compliance burdens

These reforms aim to simplify the GST structure and reduce costs for businesses.

GST Council Meeting Expected in June or July
The GST Council, chaired by the Finance Minister, is expected to convene in June or July. The agenda is likely to be extensive, covering:

Finalisation of rate rationalisation

Possible changes to compensation cess

Review of the Group of Ministers (GoM) report submitted in December 2024

This GoM report, led by Bihar Deputy Chief Minister Samrat Chaudhary, includes recommendations for reducing tax rates and restructuring GST slabs.

Proposal to Reduce Insurance Tax Rates
Another item likely to be discussed is a proposal to reduce GST on health and life insurance from 18% to 5%. The proposal also includes retaining input tax credit, which could make insurance more affordable for the public.

Petroleum Products Under GST: A Controversial Topic
Bringing petroleum products under GST remains a hot topic. While the industry believes this move would simplify the tax system and possibly reduce prices, many state governments are concerned about losing revenue.

Currently, major fuels such as crude oil, petrol, diesel, natural gas, and aviation turbine fuel are excluded from GST. Their inclusion could have wide-ranging implications for both pricing and state finances.

Restructuring GST Slabs: What’s Being Considered
There are currently four major GST slabs: 5%, 12%, 18%, and 28%. However, the Central Board of Indirect Taxes & Customs (CBIC) is reviewing a possible merger of the 12% and 18% slabs. The new slab could range between 14% and 16%, with each option having distinct revenue impacts.