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 dual-tax slab system of 5% and 18%, according to reports citing government sources. The reports also suggest that sin goods like tobacco and pan masala will be slapped with a 40% GST. The proposal has been reportedly sent to the GST Council for consideration and approval.
The dual-tax slab system is aimed at simplifying the GST structure, which currently has four tax rates – 5%, 12%, 18%, and 28%. The 12% and 28% slabs will be scrapped, and the existing 18% slab will be reduced to 15%. The 5% slab will be introduced for essential goods like food, healthcare, and education to reduce the burden on consumers.
The proposal also suggests that goods like tobacco and pan masala, which are considered sin goods, will be taxed at a higher rate of 40%. This move is aimed at discouraging consumption of these products and generating additional revenue for the government.
The GST Council, comprising finance ministers of all states, will now deliberate on the proposal and make a decision. The council has been discussing ways to simplify the GST structure and reduce the complexity of the tax regime.
The proposed GST structure is expected to have a significant impact on the economy and businesses. The dual-tax slab system is expected to benefit small and medium-sized enterprises (SMEs), which are currently struggling to comply with the complex GST structure. The reduced tax rates for essential goods will also benefit consumers, who will have to pay lower taxes on these essential items.
On the other hand, the increased tax rate on sin goods like tobacco and pan masala is expected to have a negative impact on the tobacco and pan masala industry. The industry has been facing a decline in demand in recent years due to increasing health concerns and stricter regulations. The higher tax rate is expected to accelerate the decline in demand and revenue for the industry.
The proposal has also been welcomed by consumer organizations, which have been demanding a reduction in taxes on essential goods. The organizations have been campaigning for a simpler and more transparent GST structure, and the proposed dual-tax slab system is seen as a step in the right direction.
However, the proposal has also faced criticism from some quarters. The opposition parties have accused the government of introducing a ” regressive” tax system, which will benefit the rich and harm the poor. They have also criticized the government for not reducing taxes on basic goods and services, which are essential for the poor and vulnerable sections of society.
In conclusion, the government’s proposal to introduce a dual-tax slab system of 5% and 18% GST, with sin goods like tobacco and pan masala being taxed at 40%, is a significant development in the ongoing debate on GST reform. The proposal is aimed at simplifying the GST structure, reducing the burden on consumers, and generating additional revenue for the government. While the proposal has been welcomed by some, it has also faced criticism from others. The GST Council will now deliberate on the proposal and make a decision, which will have a significant impact on the economy and businesses.
