Govt proposes 5% and 18% GST slabs, tobacco & pan masala at 40%: Reports
The Goods and Services Tax (GST) regime has been a subject of controversy and debate since its inception in 2017. The government has been facing pressure to simplify and rationalize the tax structure, which currently has multiple slabs ranging from 5% to 28%. In a major development, the government has proposed an overhaul of the GST structure, recommending two tax slabs of 5% and 18%, according to reports.
The reports, quoting government sources, also stated that sin goods like tobacco and pan masala will face a 40% GST. The proposal has been reportedly sent to the GST Council for consideration and approval.
The proposed GST structure is expected to simplify the tax regime and reduce the compliance burden on businesses. The reduction in the number of tax slabs is expected to benefit small and medium-sized enterprises (SMEs) and start-ups, which have been complaining about the complexity of the current GST system.
The 5% GST slab is likely to be applicable to essential goods and services, such as food, healthcare, and education. The 18% slab is expected to cover most of the consumer goods and services, including textiles, electronics, and automobiles.
The 40% GST slab, on the other hand, will be applicable to sin goods like tobacco and pan masala. The move is expected to help the government in reducing the consumption of these harmful products and generating additional revenue.
The proposal has been welcomed by many business associations and experts, who have been advocating for a simplification of the GST structure. “The proposal to reduce the number of tax slabs is a welcome move. It will simplify the tax regime and reduce the compliance burden on businesses,” said a spokesperson for the Confederation of Indian Industry (CII).
However, some experts have raised concerns about the impact of the proposed GST structure on the economy. “The reduction in the number of tax slabs may lead to a decline in tax revenue for the government. The government will need to ensure that the tax rates are adjusted accordingly to avoid any revenue loss,” said a tax expert.
The government has been under pressure to simplify the GST structure and reduce the compliance burden on businesses. The current GST regime has been criticized for being complex and bureaucratic, which has led to a decline in tax compliance and revenue growth.
The government has been working on simplifying the GST structure and has already taken several measures to reduce the compliance burden on businesses. The introduction of the GST Annual Return (GSTR-9) and the simplified GST Return (GSTR-3B) are some of the steps taken by the government to simplify the tax regime.
The proposed GST structure is expected to be a major reform in the tax regime and is expected to have a significant impact on the economy. The government will need to ensure that the tax rates are adjusted accordingly to avoid any revenue loss and to ensure that the tax regime is fair and equitable.
In conclusion, the government’s proposal to simplify the GST structure by introducing two tax slabs of 5% and 18% is a welcome move. The reduction in the number of tax slabs is expected to simplify the tax regime and reduce the compliance burden on businesses. However, the government will need to ensure that the tax rates are adjusted accordingly to avoid any revenue loss and to ensure that the tax regime is fair and equitable.
