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 a two-slab tax regime with rates of 5% and 18%, as per reports quoting government sources. The reports further suggest that sin goods like tobacco and pan masala will face a higher tax rate of 40%.
The proposal has been reportedly sent to the GST Council, a body comprising senior officials from the Centre and states, for consideration and approval. If implemented, the new GST structure could have significant implications for businesses, consumers, and the economy as a whole.
Under the proposed GST structure, the 5% slab is expected to cover essential items such as foodgrains, milk, and other daily consumables. The 18% slab, on the other hand, is likely to include a wider range of goods, including manufactured products, services, and luxury items.
The move to introduce a two-slab GST structure is seen as a attempt to simplify the current tax regime, which has three tax rates of 5%, 12%, and 28%. The government has been looking to rationalize the GST structure to increase its effectiveness and to reduce the compliance burden on businesses.
The proposal to impose a 40% GST on sin goods like tobacco and pan masala is seen as a measure to discourage their consumption and to generate additional revenue for the government. The government has been cracking down on the production and sale of these products, which are considered hazardous to public health.
The proposal has been welcomed by some experts, who argue that it could help to reduce the tax burden on businesses and to increase the effectiveness of the GST regime. “A two-slab GST structure is simpler and more effective than the current three-slab structure,” said Dr. Surajit Mazumdar, a tax expert. “It will also reduce the compliance burden on businesses and make it easier for them to navigate the tax regime.”
However, others have expressed concerns about the impact of the proposal on certain industries, such as the pharmaceutical sector. “The pharmaceutical industry is already heavily taxed, and a 18% GST rate could make it even more difficult for companies to operate profitably,” said Dr. Rakesh Shah, a pharmaceutical industry expert.
The government has been under pressure to reform the GST regime, which was introduced in 2017 to replace a complex network of state and central taxes. The GST regime was originally supposed to be a single, unified tax rate, but the government was forced to introduce multiple tax rates due to opposition from certain states.
The GST Council, which is responsible for making decisions on GST rates and other matters, has been working on a proposal to rationalize the GST structure for several months. The council has been considering a range of options, including a two-slab GST structure and a single, unified GST rate.
The government’s proposal to impose a 40% GST on sin goods like tobacco and pan masala is seen as a measure to discourage their consumption and to generate additional revenue for the government. The government has been cracking down on the production and sale of these products, which are considered hazardous to public health.
In recent years, the government has taken several steps to reduce the consumption of tobacco and pan masala, including increasing taxes on these products and launching public awareness campaigns. The government has also banned the sale of these products in certain areas and has imposed strict regulations on their production and sale.
The proposal to impose a 40% GST on sin goods like tobacco and pan masala is seen as a measure to build on these efforts and to further reduce the consumption of these products. The government is expected to generate significant revenue from the sale of these products, which could be used to fund public health programs and other initiatives.
In conclusion, the government’s proposal to introduce a two-slab GST structure with rates of 5% and 18% and to impose a 40% GST on sin goods like tobacco and pan masala is a significant development. The proposal has been welcomed by some experts, but others have expressed concerns about its impact on certain industries. The proposal is now with the GST Council, which is expected to consider and approve it in the coming weeks.
