.png){kind=small}
.png)
.png)
.png)
.png)
9 hours ago
3
ARTICLE AD BOX
The new GST revamp proposal is expected to be presented to the GST Council. (AI image)
GST revamp on the cards: Since its launch in 2017, the Goods and Services Tax (GST) is set to undergo its first major revamp. The biggest takeaway from this move from the common man’s perspective is that the GST slabs may be rejigged, with items in the 12% category of tax possibly moving to the 5% bracket.According to an ET report, the Prime Minister’s Office has approved in-principle the substantial restructuring of the GST framework.Following the monsoon session of parliament, the new GST revamp proposal is expected to be presented to the GST Council, the highest decision-making authority for indirect taxes, which will meet in August.
GST Slabs Set For Change
- The current GST framework consists of five tax rates — nil, 5%, 12%, 18%, 28% — along with special rates of 0.25% and 3% which are applicable to precious metals.
- Within the GST structure, approximately 21% of all goods fall under the 5% category.
- The 12% bracket has 19% of items, whilst the 18% slab contains 44% of goods. The highest bracket of 28% applies to only 3% of the total items.
- The authorities are considering eliminating the 12% tax bracket and redistributing these items between the 5% and 18% slabs.
- Additional tax in the form of compensation cess applies to specific luxury and harmful products, such as cigarettes and automobiles, in the highest 28% bracket.
- This was implemented to protect states from potential revenue losses during GST transition for five years until June 2022. The cess duration was subsequently extended to March 31, 2026, to service the debt of ₹2.69 lakh crore that the Centre borrowed for states during the Covid crisis to address the cess fund deficit.
- The GST Council has appointed a dedicated group of ministers to evaluate the utilisation of excess funds in the cess collection and determine future actions regarding this matter.
The timing is ideal for restructuring as tax systems have stabilised and economic indicators remain strong.
With upcoming free trade agreements with developed nations, the government aims to remove obstacles that might prevent domestic industries from expanding their operations.
GST Overhaul
Meanwhile, the income tax legislation is also set for an overhaul, with the new Incoem Tax bill expected in the monsoon session.
When Will GST Rates Come Down?
According to the financial daily, the finance ministry will start discussions with states to establish political agreement on implementing these GST reforms.
The ministry has already started internal consultations with relevant departments regarding the proposed changes, sources were quoted as saying.T
he restructuring of GST will lead to both tax slab modifications and streamlined procedures, aiming to benefit both consumers and businesses. Although a ministerial group was tasked by the GST Council to evaluate rate rationalisation, progress has been limited.Industry people have recently presented strong arguments to the government for reforming the GST structure, including modifications to rates, slabs and procedures, whilst highlighting various operational challenges.Members of Parliament from different political parties have raised concerns about GST-related issues that require attention. Senior government officials have conducted thorough deliberations, and policy experts believe that a streamlined GST system could potentially enhance economic growth, according to a source familiar with the matter.
English (US) ·