The government has unveiled an ambitious plan to revamp the Goods and Services Tax (GST) framework, proposing a streamlined structure with just two primary slabs—5 per cent and 18 per cent. Meanwhile, so-called sin goods like tobacco and pan masala are set to be taxed at a steep 40 per cent, claimed reports.
The puff and pleasure of blowing smoke rings may soon come at a steeper price.
The ball is in the GST Council’s court. It will finalise the details next month.
As of now, GST operates with five principal slabs: 0 per cent, 5 per cent, 12 per cent, 18 per cent, and 28 per cent.
The 12 per cent and 18 per cent categories serve as the standard rates, covering a broad range of goods and services. The proposed reform seeks to eliminate the 12 per cent slab entirely, reallocating the items within it to either the 5 per cent or 18 per cent brackets.
In his Independence Day speech, Prime Minister Narendra Modi announced that a “next-generation GST reform” would be introduced by Diwali. He said that over the past eight years, a major GST reform had been implemented to simplify taxes. According to him, the time had come for a review, which had been completed in consultation with the states, and the government was now ready to bring in the next phase of reform.
He further stated that the reform would be a Diwali gift, with taxes on essential services for individuals being substantially reduced.
The revised structure should come as a relief to the middle-class.
He said the move would benefit MSMEs, make daily need products cheaper, and boost the economy.
Reports added that the rationalisation plan also includes tax reductions for farm products, health-related goods, handicrafts, and insurance. The government expects that these changes will encourage consumption and promote economic growth.
Unnamed officials told media outlets that health and life insurance, essential services, could become more pocket friendly.
Though the government acknowledges that slashing GST rates may cause a temporary dip in revenue, it is hopeful that a surge in sales and better tax compliance should bridge the gap.
The rollout is targeted just ahead of Diwali.
Also Read: Statehood Demands Cannot Ignore Pahalgam Attack And Security Fallout: SC https://www.vibesofindia.com/statehood-demands-cannot-ignore-pahalgam-attack-and-security-fallout-sc/
