Govt Proposes 5% and 18% GST Slabs, Tobacco & Pan Masala at 40%: Reports
In a significant move aimed at simplifying the Goods and Services Tax (GST) structure, the government has proposed a two-slab system, with rates of 5% and 18%, for most goods and services, according to reports. The reports also suggest that sin goods like tobacco and pan masala will be subjected to a higher GST rate of 40%.
The proposal, reportedly sent to the GST Council, is a significant departure from the existing four-tier GST structure, which has been in place since its introduction in 2017. The current rates range from 0% (for essential goods like medicines and foodgrains) to 28% (for luxury items like cars and yachts).
The proposed 5% GST slab is expected to cover most essential goods and services, including food items, healthcare products, and education services. This rate is likely to be similar to the existing rate for most goods and services, which is currently 18%.
The 18% GST slab, on the other hand, is expected to cover goods and services that are considered to be of a higher value or are deemed to be luxury items. This rate is likely to be similar to the existing rate for goods and services like textiles, footwear, and electronic items.
The 40% GST slab, as proposed, will be applicable to sin goods like tobacco and pan masala. This rate is significantly higher than the existing rate of 28% for these products, and is aimed at discouraging their consumption.
The proposal is a result of the government’s efforts to simplify the GST structure and make it more efficient. The existing GST structure has been criticized for being too complex, with multiple rates and exemptions leading to confusion and ambiguity.
The introduction of a two-slab system is expected to reduce the complexity of the GST structure and make it easier for businesses and consumers to comply with the tax laws. The proposal is also expected to reduce the bureaucracy and paperwork associated with GST, and make the tax system more transparent and accountable.
The proposal has been welcomed by industry experts and trade bodies, who have been advocating for a simpler GST structure for a long time. “A two-slab system is a step in the right direction,” said a spokesperson for the Confederation of Indian Industry (CII). “It will simplify the GST structure and reduce the compliance burden on businesses.”
The proposal is still pending approval from the GST Council, which is a constitutional body comprising representatives from the Centre and states. Once approved, the new GST rates are expected to come into effect from April 1, 2023.
In conclusion, the government’s proposal to introduce a two-slab GST system, with rates of 5% and 18%, and a higher rate of 40% for sin goods like tobacco and pan masala, is a significant move aimed at simplifying the GST structure and making it more efficient. The proposal is expected to reduce the complexity of the GST structure, reduce the compliance burden on businesses, and make the tax system more transparent and accountable.
