Govt proposes 5% and 18% GST slabs, tobacco & pan masala at 40%: Reports
In a significant move, the government has proposed an overhaul of the Goods and Services Tax (GST) structure, recommending two tax slabs of 5% and 18%, said reports quoting government sources. The reports further stated that sin goods like tobacco and pan masala will face a 40% GST. The proposal has been reportedly sent to the GST Council, which is expected to take a decision on the matter soon.
The 5% and 18% GST slabs will apply to most goods and services, which will be a significant departure from the current tax structure. The GST, which was introduced in 2017, has four slabs – 0%, 5%, 12%, and 28%. The lower slabs are applicable to essential goods and services, while the higher slabs are applicable to luxury goods and services.
The proposal to reduce the number of GST slabs is aimed at simplifying the tax structure and reducing the compliance burden on businesses. The 5% slab will apply to goods and services that are considered essential, such as food, medicines, and education. The 18% slab will apply to goods and services that are considered to be of medium importance, such as clothing, household items, and transportation services.
The 40% GST slab for sin goods like tobacco and pan masala is aimed at reducing their consumption and promoting public health. Tobacco products are one of the largest contributors to preventable deaths globally, and pan masala is known to cause oral and lung cancer. The higher GST slab is expected to increase the cost of these products, making them less affordable for consumers.
The proposal has been welcomed by industry bodies and experts, who have been calling for a simplification of the GST structure. “The proposal to reduce the number of GST slabs is a step in the right direction. It will simplify the tax structure and reduce the compliance burden on businesses,” said a senior industry expert.
However, some experts have raised concerns about the impact of the higher GST slab on sin goods. “While the intention is good, the higher GST slab may not be enough to deter consumption of sin goods. The government should also consider other measures, such as increasing the excise duty on these products,” said another expert.
The proposal is expected to be taken up by the GST Council, which is a constitutional body that makes decisions on GST. The council is headed by the Union Finance Minister and includes state finance ministers as members.
The GST Council has been considering various proposals to simplify the GST structure and increase revenue. The government has been facing a revenue shortfall due to the COVID-19 pandemic, and the GST has been one of the main sources of revenue.
The government has also been considering other measures to increase revenue, such as increasing the GST rates on luxury goods and services. However, the proposal to reduce the number of GST slabs and increase the GST rate on sin goods is seen as a significant departure from the current tax structure.
In conclusion, the government’s proposal to reduce the number of GST slabs and increase the GST rate on sin goods is a significant step towards simplifying the tax structure and promoting public health. While the proposal is expected to be welcomed by industry bodies and experts, some concerns have been raised about the impact of the higher GST slab on sin goods. The GST Council is expected to take a decision on the proposal soon, and it remains to be seen how it will impact the economy and public health.
