Govt proposes 5% and 18% GST slabs, tobacco & pan masala at 40%: Reports
The Goods and Services Tax (GST) regime in India is set to undergo a significant overhaul, with the government proposing two tax slabs of 5% and 18%, according to reports. Sin goods like tobacco and pan masala, which are notorious for their negative health impacts, will face a higher tax rate of 40%, as per the reports.
The proposal has been sent to the GST Council, which is headed by the Union Finance Minister, for its approval. The GST Council is the apex decision-making body responsible for framing laws and rules related to the GST.
The reports suggest that the government is looking to simplify the GST structure, which has been criticized for its complexity and multiple tax slabs. The current GST structure has four tax slabs – 0%, 5%, 12%, and 18%. The government believes that the proposed two-slab structure will make it easier for businesses and consumers to navigate the tax system.
The 5% GST slab is likely to be applicable to essential goods and services, such as food, medicines, and housing. The 18% GST slab is likely to be applicable to discretionary goods and services, such as luxury items, entertainment, and travel.
The 40% GST slab for tobacco and pan masala is a significant move, as these products are known to have devastating health impacts. The government has been cracking down on the sale of these products, particularly to minors, and has also introduced several measures to reduce their consumption.
The proposal has been welcomed by health experts and advocacy groups, who have long been demanding stricter regulations on the sale of tobacco and pan masala. “This is a welcome move, but we need to see how it is implemented,” said Dr. Kirti Saxena, a health expert. “Tobacco and pan masala are deadly products that need to be taxed heavily to discourage their use.”
Industry experts have also welcomed the proposal, saying that it will help to reduce the complexity of the GST system. “The two-slab structure will make it easier for businesses to plan and manage their finances,” said Rohan Shah, a tax consultant. “The 40% tax on tobacco and pan masala will also help to reduce their consumption and promote healthier alternatives.”
However, some experts have expressed concerns about the impact of the proposed GST structure on the economy. “The 40% tax on tobacco and pan masala may lead to a loss of revenue for the government,” said Dr. Arvind Subramanian, a former Chief Economic Adviser to the government. “The government needs to carefully consider the impact of this proposal on the economy and ensure that it does not lead to any unintended consequences.”
The proposal is expected to be discussed and finalized by the GST Council in the coming weeks. If approved, the new GST structure is expected to come into effect from April 1, 2024.
Source: https://x.com/PTI_News/status/1956324453438406706
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