A Group of Ministers (GoM), including state finance ministers, is already working on rate rationalisation and the trimming of GST slabs. The Centre has proposed new rates, allowing some relaxations and cutting down taxes on daily-use items and those under 28% tax slab under the revamped Goods and Services Tax (GST) structure, PTI quoted government sources as saying. The development comes just hours after Prime Minister Narendra Modi announced next-generation reforms in the GST by Diwali during his Independence Day speech.
Speaking from the ramparts of the Red Fort, PM Modi said it was time to reform GST, which has completed 8 years since its implementation in July 2017, including multiple direct taxes and local duties.
Changes likely under renewed GST
Two new rates: The central government has proposed two rates, 5 per cent and 18 per cent, under the revamped GST regime, news agency PTI reported, citing sources. Meanwhile, a special 40 per cent rate is likely to be levied on luxury goods, it added.
Move from 12% to 5%: Citing government sources, the news agency reported that 99 per cent of the items that currently fall under the 12 per cent GST tax slab will be moved to the 5 per cent bracket under the renewed regime.
Shift from 28% to 18%: Furthermore, around 90 per cent of taxable items in the 28 per cent bracket would be moved to the 18 per cent slab. With this renewed GST move, the Centre reportedly expects to give a major boost to consumption, which “will offset revenue loss due to rate rationalisation”.
Daily-use items at 5%: Daily-use products and common man items are likely to be taxed at 5 per cent under the revamped GST regime, PTI reported. Tobacco products tax: A 40 per cent GST will be imposed on tobacco products under the renewed regime, with the total incidence of taxation set to remain at the current 88 per cent.
Diesel, gasoline, others out of GST: Petroleum products, however, will continue to remain outside the GST regime even under the revamped structure.
What PM Modi said on GST
In his Independence Day speech, PM Modi said that the central government will introduce next-generation GST reforms by Diwali, noting that discussions over the same have been held with states. “We have discussed with states and will usher in next-generation GST reforms by Diwali, which will be a Diwali gift for citizens. Taxes on items used by the common man will be reduced substantially. Our MSMEs will benefit hugely. Daily-use items will become cheaper, which will also strengthen our economy,” he said.
A Group of Ministers (GoM), including state finance ministers, is already working on rate rationalisation and the pruning of GST slabs. The Prime Minister also said that a task force will be set up to recommend all necessary GST reforms in a time-bound manner for the 21st century. He said that India must also focus on high-quality, affordable products to build a prosperous, self-reliant nation that honours the sacrifices of freedom fighters.
The PM emphasised that self-reliance goes beyond imports, exports, or currency exchange. “It is tied to our capabilities. When self-reliance begins to erode, so does our strength. To preserve, maintain, and enhance our capabilities, self-reliance is essential.” He said that India must focus on strengthening itself, not limiting others, to earn global respect amid the increasing economic self-interest.
