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%, according to reports. The reports, which quote government sources, also suggest that sin goods like tobacco and pan masala will be slapped with a hefty 40% GST.
The proposal has been reportedly sent to the GST Council, which is expected to discuss and finalize the new tax structure. The move is aimed at simplifying the GST regime, which has been criticized for its complexity and multiple tax slabs.
Under the proposed structure, most goods and services will fall under the 5% or 18% tax slab. This means that a wide range of consumer goods, including food items, clothing, and electronics, will be taxed at a lower rate. The 5% slab is expected to cover most essential items, while the 18% slab will apply to discretionary goods and services.
The 40% GST slab, on the other hand, will apply to sin goods like tobacco and pan masala. This is in line with the government’s efforts to discourage consumption of these products and reduce their impact on public health. The high tax rate is expected to increase the prices of these products, making them less affordable to consumers.
The proposal has been welcomed by many experts, who see it as a step towards simplifying the GST regime and making it more equitable. “The proposed GST structure is a step in the right direction,” said Dr. Raghuram Rajan, a former RBI governor. “It will help to reduce the complexity of the GST regime and make it more transparent.”
However, some experts have raised concerns about the potential impact of the high tax rate on small businesses and the informal sector. “The 40% GST rate on tobacco and pan masala will have a disproportionate impact on small businesses and the informal sector,” said Dr. Rajiv Kumar, a leading economist. “The government needs to ensure that it provides adequate support to these businesses to help them adjust to the new tax regime.”
The government has been working on simplifying the GST regime since its introduction in July 2017. The current GST structure has multiple tax slabs, including 0%, 5%, 12%, 18%, and 28%. The government has been criticized for the complexity of the GST regime, which has led to widespread confusion and compliance issues.
The proposal to simplify the GST structure comes at a time when the government is under pressure to boost economic growth and increase revenue. The GST regime has been a key source of revenue for the government, but its complexity has led to widespread evasion and non-compliance.
The government has also been working to improve the compliance rate under the GST regime. The GST Council has introduced several measures to improve compliance, including the introduction of e-invoicing and the expansion of the GST registration threshold.
The proposal to simplify the GST structure is expected to be discussed and finalized by the GST Council in the coming weeks. The government has invited feedback from stakeholders and the public on the proposed structure, and is expected to make changes based on the feedback received.
In conclusion, the government’s proposal to simplify the GST structure by introducing two tax slabs of 5% and 18%, and a 40% GST slab for sin goods like tobacco and pan masala, is a step in the right direction. The move is expected to simplify the GST regime, increase transparency, and reduce the complexity of the tax system. However, the government needs to ensure that it provides adequate support to small businesses and the informal sector to help them adjust to the new tax regime.
