Govt proposes 5% and 18% GST slabs, tobacco & pan masala at 40%: Reports
The Indian government has proposed a significant overhaul of the Goods and Services Tax (GST) structure, recommending two tax slabs of 5% and 18%, according to reports quoting government sources. The reports further stated that sin goods like tobacco and pan masala will face a 40% GST. This proposal has reportedly been sent to the GST Council for further deliberation and approval.
The proposal to simplify the GST structure is aimed at reducing the complexity and ambiguity that has been plaguing the indirect tax regime. The current GST structure has multiple tax slabs, including 0%, 5%, 12%, 18%, and 28%, with a cess on certain items. The government hopes that the new slabs will make it easier for businesses and consumers to understand and comply with the tax laws.
The 5% GST slab is expected to be applicable to essential goods and services, such as food, clothing, and healthcare. The 18% slab, on the other hand, is likely to cover goods and services that are considered non-essential, such as luxury items and entertainment services.
The 40% GST slab, which will be applicable to sin goods like tobacco and pan masala, is a significant departure from the current regime. The current GST rate on these products is 28% with a cess of 22-30%. The increased tax rate is aimed at reducing the consumption of these products and reducing the harm they cause to public health.
The proposal to increase the GST rate on tobacco and pan masala has been welcomed by health advocates, who have long been demanding a higher tax on these products. According to the World Health Organization (WHO), tobacco is the leading cause of preventable deaths globally, and India is home to over 11% of the world’s tobacco users.
The proposal to simplify the GST structure and increase the tax rate on sin goods is also expected to help the government increase its tax revenues. The government has been facing a revenue shortfall in recent years, and the increased tax rates are expected to help bridge the gap.
The proposal has been sent to the GST Council, which is a constitutional body that oversees the implementation of the GST law. The council is composed of the Centre and the states, and it has the power to make recommendations and take decisions on GST-related matters.
The GST Council has been a key player in shaping the GST regime in India. Since its inception, the council has made several key decisions, including the introduction of e-way bills, the reduction of GST rates on several items, and the introduction of the reverse charge mechanism.
The proposal to simplify the GST structure and increase the tax rate on sin goods is expected to have a significant impact on the Indian economy. It is expected to reduce the complexity and ambiguity that has been plaguing the indirect tax regime, increase tax revenues, and promote a healthier and more sustainable economy.
In conclusion, the proposal to simplify the GST structure and increase the tax rate on sin goods is a significant development in the Indian tax landscape. The proposal is expected to have a significant impact on the economy and society, and it is hoped that it will be implemented soon.
