Govt proposes 5% and 18% GST slabs, tobacco & pan masala at 40%: Reports
The Goods and Services Tax (GST) structure is set to undergo a significant overhaul, with the government proposing two tax slabs of 5% and 18% for a majority of goods and services, according to reports. The reports also suggest that sin goods like tobacco and pan masala will be slapped with a higher GST rate of 40%.
The proposal has been reportedly sent to the GST Council, which will consider and finalize the new tax structure. The development comes as the government seeks to simplify the GST system, reduce compliance burden, and increase tax collections.
As per the proposal, the 5% GST slab will cover essential goods and services, including food, healthcare, and education. The 18% slab, on the other hand, will include luxury goods and services, such as high-end electronics, luxury vehicles, and premium real estate.
The 40% GST slab will apply to sin goods, including tobacco and pan masala, which are considered detrimental to health. The higher tax rate is aimed at discouraging consumption of these goods and reducing their negative impact on society.
The proposal is part of the government’s efforts to rationalize the GST structure, which was introduced in 2017. The current GST system has four tax slabs – 5%, 12%, 18%, and 28% – with multiple rates and exemptions creating complexity and confusion.
The government has been working to simplify the GST system, reduce the number of tax rates, and eliminate exemptions. The proposal to reduce the number of tax slabs to two – 5% and 18% – is seen as a step towards achieving this goal.
The benefits of a simplified GST structure are numerous. It will reduce compliance burden on businesses, making it easier for them to file returns and pay taxes. It will also reduce the risk of errors and disputes, leading to increased tax collections and reduced litigation.
The proposed GST structure is also expected to benefit consumers, who will have a clearer understanding of the tax rates and can plan their purchases accordingly. The reduced complexity will also lead to increased transparency and accountability, as businesses will have to disclose their tax liabilities and payments.
The government’s proposal to increase the GST rate on sin goods like tobacco and pan masala is also seen as a positive step. These goods are known to have a negative impact on health, and the higher tax rate will discourage their consumption. The additional revenue generated from the increased tax rate can be used to fund public health initiatives and programs.
The proposal has been welcomed by industry bodies and experts, who have been calling for a simplification of the GST structure. “The proposed GST structure is a step in the right direction,” said an industry expert. “It will simplify the tax system, reduce compliance burden, and increase transparency and accountability.”
However, some experts have raised concerns about the impact of the proposed GST structure on certain industries. “The 40% GST rate on sin goods like tobacco and pan masala may lead to increased prices and reduced demand,” said an expert. “This could have a negative impact on the job market and the economy.”
Despite these concerns, the government’s proposal to overhaul the GST structure is seen as a positive step towards simplifying the tax system and promoting economic growth. The proposal will now be considered by the GST Council, which will finalize the new tax structure after consulting with industry bodies and experts.
