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 suggest that sin goods like tobacco and pan masala will face a whopping 40% GST. The proposal has been reportedly sent to the GST Council for consideration.
The GST Council, comprising central and state finance ministers, is responsible for taking decisions on tax rates, exemptions, and other GST-related matters. The council had last met in September 2022 to discuss the GST rates and structure.
The proposed GST slabs of 5% and 18% are expected to simplify the tax system and reduce the complexity that has been a major issue since the introduction of GST in 2017. The 5% slab is likely to be applied to essential goods and services, while the 18% slab will cover a wide range of goods and services, including luxury items.
The move to increase the tax rate on sin goods like tobacco and pan masala is aimed at discouraging their consumption and generating additional revenue for the government. Tobacco products, in particular, have been a major source of revenue for the government, and increasing the tax rate on them is expected to have a significant impact on their sales.
The proposed GST structure is expected to have a significant impact on various sectors of the economy, including industry, trade, and commerce. The 5% slab is likely to benefit small and medium-sized enterprises (SMEs), which have been struggling to comply with the complex GST regime.
Industry experts have welcomed the proposal, saying that it will simplify the GST system and reduce the compliance burden on businesses. “The proposed GST structure is a step in the right direction. It will simplify the tax system and reduce the complexity that has been a major issue for businesses,” said Rohan Shah, a tax consultant.
However, some experts have expressed concerns about the impact of the proposed GST structure on the economy. “The proposal to increase the tax rate on sin goods like tobacco and pan masala may have a negative impact on the economy. These products are already heavily taxed, and increasing the tax rate further may lead to a decline in their sales and revenue for the government,” said Sanjay Kumar, an economist.
The government has been under pressure to simplify the GST system and reduce the compliance burden on businesses. The proposed GST structure is expected to achieve these goals and make the tax system more efficient and transparent.
The reports of the proposed GST structure have been welcomed by the opposition parties, which have been critical of the government’s handling of the GST regime. “The proposal to simplify the GST system is a welcome move. It will benefit small and medium-sized enterprises and reduce the compliance burden on businesses,” said Rahul Gandhi, the leader of the opposition.
In conclusion, the government’s proposal to simplify the GST structure by introducing two tax slabs of 5% and 18% is a significant development. The proposal to increase the tax rate on sin goods like tobacco and pan masala is aimed at discouraging their consumption and generating additional revenue for the government. The proposed GST structure is expected to simplify the tax system, reduce the compliance burden on businesses, and make the economy more efficient and transparent.
