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 also suggest that sin goods like tobacco and pan masala will face a 40% GST. The proposal has been reportedly sent to the GST Council, signaling a major shift in the country’s indirect tax regime.
The GST Council, comprising state finance ministers and central government officials, has been deliberating on the GST structure to simplify the tax regime and reduce the number of slabs. The proposal suggests that most goods and services will be taxed at a rate of 5% or 18%, with a few exceptions. The 5% slab is likely to include essential goods like foodgrains, healthcare, and education, while the 18% slab will cover a wide range of goods and services, including consumer durables and luxury items.
The 40% GST slab, on the other hand, is proposed for sin goods like tobacco and pan masala, which are known to have a significant impact on public health. This move is expected to increase the cost of these products and discourage their consumption. The government has been cracking down on these products in recent years, and the higher GST rate is seen as a step towards reducing their availability and promoting healthier alternatives.
The proposal has been welcomed by experts, who believe that it will simplify the GST regime and reduce the complexity of tax compliance for businesses. “The proposal to reduce the number of GST slabs will make it easier for businesses to comply with the law and reduce the burden of tax returns,” said a tax expert. “The higher GST rate on sin goods is also a step in the right direction, as it will help reduce their consumption and promote public health.”
However, some experts have expressed concerns that the proposal may not be effective in achieving its objectives. “The GST rate on sin goods is still too low, and the government needs to consider a higher rate to make a significant impact,” said another expert. “Additionally, the proposal does not address the issue of tax evasion, which is a major problem in the GST regime.”
The government has been working to improve the GST regime since its introduction in 2017. The regime has undergone several changes, including the introduction of a new GST return filing system and the simplification of tax rates. Despite these efforts, the GST regime has faced criticism for its complexity and the high compliance burden it places on businesses.
The proposed GST structure is expected to be discussed by the GST Council in its next meeting. If approved, the new structure will come into effect from April 1, 2024. The government has also announced plans to introduce a new online portal for GST returns, which will make it easier for businesses to file their returns and reduce the risk of errors.
In conclusion, the government’s proposal to introduce a new GST structure with two tax slabs of 5% and 18% is a significant step towards simplifying the tax regime and reducing the compliance burden on businesses. The higher GST rate on sin goods like tobacco and pan masala is also a step in the right direction, as it will help reduce their consumption and promote public health. However, the proposal needs to be carefully evaluated to ensure that it is effective in achieving its objectives.
