Govt Proposes 5% and 18% GST Slabs, Tobacco & Pan Masala at 40%: Reports
The Indian government has proposed a significant overhaul of the Goods and Services Tax (GST) structure, recommending two tax slabs of 5% and 18%, according to reports quoting government sources. The reports also suggest that sin goods like tobacco and pan masala will face a higher GST rate of 40%. The proposal has been reportedly sent to the GST Council for consideration.
The GST Council, which is a constitutional body responsible for making decisions on GST policy and rates, is scheduled to meet soon to discuss the proposal. The council consists of representatives from the Centre and states, and its decisions are binding on all states and the Centre.
The proposal to reduce the number of GST slabs from the current four (5%, 12%, 18%, and 28%) to two (5% and 18%) is aimed at simplifying the tax structure and reducing the complexity of GST compliance for businesses. The 5% slab is likely to be applicable to essential goods and services, while the 18% slab will cover most goods and services.
Tobacco and pan masala, which are classified as sin goods due to their negative impact on public health, will face a higher GST rate of 40%. This move is expected to increase the price of these products and reduce their consumption. The government has been cracking down on the sale of these products, especially among children and youth, and the higher GST rate is seen as a step towards reducing their availability and consumption.
The proposal has been welcomed by industry bodies and tax experts, who say that it will help to reduce the complexity of GST compliance and make it easier for businesses to navigate the tax system. They also hope that the reduction in the number of GST slabs will lead to a reduction in tax rates and an increase in economic activity.
However, some industry bodies have expressed concerns about the impact of the higher GST rate on tobacco and pan masala products. They argue that the higher tax rate will lead to a loss of revenue for the government and could drive these products underground, making it difficult for the government to regulate their sale.
The proposal has also been welcomed by health experts, who say that the higher GST rate on tobacco and pan masala products will help to reduce their consumption and improve public health. They argue that these products are major risk factors for several non-communicable diseases, including cancer, heart disease, and respiratory diseases, and that reducing their consumption will lead to a reduction in the burden of these diseases on the healthcare system.
The government has been making efforts to reduce the consumption of tobacco and pan masala products in recent years. In 2019, the government increased the minimum price of cigarettes and other tobacco products to reduce their affordability and consumption. The government has also launched several campaigns to raise awareness about the dangers of tobacco and pan masala consumption and to encourage people to quit these products.
In conclusion, the proposal to reduce the number of GST slabs to two (5% and 18%) and to increase the GST rate on tobacco and pan masala products to 40% is a significant step towards simplifying the tax structure and reducing the complexity of GST compliance for businesses. The higher GST rate on these products is also expected to reduce their consumption and improve public health. The proposal is expected to be discussed and approved by the GST Council soon, and it is hoped that it will lead to a more efficient and effective tax system in India.
News Source:
https://x.com/PTI_News/status/1956324453438406706
