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Centre to slash GST on most taxable items in 28% bracket to 18%: Report
The government has proposed two rates – 5% and 18% – under the revamped Goods and Services Tax regime.
The Central government is expected to announce a huge respite in the GST structure, bringing the daily-use products in 5 per cent category while slashing the tax rate of 90 per cent of the items in the 28% tax bracket to 18%, PTI quoted government sources as saying on Friday.
The development comes hours after Prime Minister Narendra Modi, during the Independence Day address, promised next generation Goods and Services Tax (GST) reforms as Diwali gift for the country.
As per government sources, the daily-use products will be taxed at 5 per cent in revamped GST regime. The government has proposed two rates – 5% and 18% – under the revamped Goods and Services Tax regime, PTI reported, quoting government sources.
The sources also said that 90% of taxable items in the existing 28% bracket are likely to shift to the 18% slab in the revamped regime. A special 40% GST will also be applicable on luxury goods.
Earlier in the day, PM Modi announced that the government was set to bring a major reform in GST, which would significantly relieve consumers and small businesses.
The PM stated that the revisions in the GST would be rolled out around Diwali and described them as a "double Diwali gift" for the people.
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"This Diwali, I am going to give you a 'double Diwali' gift. A major announcement is coming for the people of the country. Over the past eight years, we implemented a major GST reform that significantly reduced the tax burden across the nation. Now, after eight years, the time has come to review it. We have formed a high-powered committee to begin this review process and have held consultations with the states as well. We are now bringing in next-generation GST reforms. This will become a Diwali gift for the nation," PM Modi said.
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"Tax rates on essential goods and daily needs will be reduced under a simplified framework. This will bring significant relief and convenience. Our MSMEs and small industries will also benefit greatly from these changes," he added.
The government has previously said that it wants to change GST rates and reduce the number of brackets, referring to tax rates for different categories, under a tax regime introduced in 2017.
The country currently levies GST at 5%, 12%, 18% and 28% on most goods and services, excluding gold and silver, and applies an additional levy on so-called demerit items such as cigarettes and high-end cars.
