Govt proposes 5% and 18% GST slabs, tobacco & pan masala at 40%: Reports
In a significant development, the government has proposed a major overhaul of the Goods and Services Tax (GST) structure, recommending two tax slabs of 5% and 18%, as reported by sources. Additionally, sin goods like tobacco and pan masala are likely to face a higher GST rate of 40%. The proposal has been sent to the GST Council, according to reports.
The GST Council, which is responsible for making decisions on GST rates, has been considering the proposal to simplify the tax structure and reduce the number of tax rates. The current GST structure has multiple rates, including 5%, 12%, 18%, and 28%, with some items also attracting a cess.
The reports suggest that the government is looking to reduce the number of tax rates to make the system more streamlined and easier to understand for taxpayers. The proposed 5% and 18% tax slabs are expected to cover most goods and services, with a few exceptions.
The 5% tax slab is likely to cover essential commodities like food, clothing, and healthcare, while the 18% slab is expected to cover goods and services that are considered luxury items. The proposal also includes a 40% GST rate for sin goods like tobacco and pan masala, which are considered harmful to public health.
The decision to impose a higher GST rate on tobacco and pan masala is expected to help the government reduce the revenue it loses due to tax evasion and smuggling of these products. The government has been taking steps to reduce the consumption of these products, and the increased GST rate is seen as a move to discourage their use further.
The proposal to simplify the GST structure and reduce the number of tax rates has been welcomed by industry experts, who say it will help reduce compliance costs and make it easier for taxpayers to navigate the system.
“The proposed GST structure is a welcome move, as it will simplify the tax system and reduce the complexity that taxpayers face,” said Rakesh Nangia, a chartered accountant. “The reduced number of tax rates will also help reduce compliance costs and make it easier for taxpayers to comply with the law.”
However, some experts have raised concerns about the impact of the increased GST rate on tobacco and pan masala on small businesses and the informal economy. They say that the increased tax rate could lead to job losses and economic hardship for those who depend on these industries.
“The increased GST rate on tobacco and pan masala could have a negative impact on small businesses and the informal economy,” said Anil Bhardwaj, secretary general of the industry body PHD Chamber of Commerce. “We urge the government to consider the impact of such a move on these sectors and to provide support to those who may be affected.”
The proposal to simplify the GST structure and reduce the number of tax rates is likely to be discussed at the next meeting of the GST Council, which is scheduled to take place soon. The government is expected to take a final decision on the proposal after considering the views of all stakeholders.
In conclusion, the proposed GST structure is a significant development that is expected to simplify the tax system and reduce compliance costs. The decision to impose a higher GST rate on tobacco and pan masala is expected to help the government reduce the revenue it loses due to tax evasion and smuggling of these products. While some experts have raised concerns about the impact of the increased GST rate on small businesses and the informal economy, the proposal is expected to have a positive impact on the overall economy.
