The Centre is likely to amend the GST structure for several items, including daily-use products and luxury goods, among other items in a bid to rationalise the tax structure, news agency PTI quoted government sources as saying on Friday.
The development comes shortly after Prime Minister Narendra Modi on Friday announced during his Independence Day speech that he will make "this Diwali, double Diwali" for the people of the country. PM Modi promised a Diwali gift in the form of a "big reform of GST."
What we know so far on GST-related changes?
The government sources have said that the central government has proposed to scrap the existing tax slabs of 12 per cent and 28 per cent of GST rate and keep only 5 per cent and 18 per cent GST rates.
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The government is also expected to slash the tax on 90 per cent of the goods under the 28 per cent tax bracket and will bring it down to 18 per cent. Similarly, the goods in the 12 per cent slab are proposed to move in the 5 per cent slab.
{{/usCountry}}The government is also expected to slash the tax on 90 per cent of the goods under the 28 per cent tax bracket and will bring it down to 18 per cent. Similarly, the goods in the 12 per cent slab are proposed to move in the 5 per cent slab.
{{/usCountry}}However, the government is also set to introduce a new slab of 40 per cent, which would include goods like tobacco, pan masala and luxury items.
A meeting of the GST Council is likely to be held in September or October to consider the proposal.
What gets cheaper & what gets expensive?
The government sources told news agency ANI that the restructuring of the existing tax slabs and the new slabs will have marginal negative effect on GST collection. A proposal has already been sent to the Group of Ministers (GoM) to enable constructive and inclusive dialogue.
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The move is likely to benefit economic sectors like agriculture, textiles, fertilisers, renewable energy, automotive, handicrafts, healthcare, insurance, construction, transportation, ANI reported.
However, there is a proposal to move "sin goods" like tobacco and pan masala to a new tax slab of 40 per cent. The special rate will be applicable to only seven items, including tobacco.
Products like diamonds and precious stones, which are labour-intensive and export-based, will continue to be taxed at the same rate. Meanwhile, the petroleum products will continue to remain outside the revamped GST regime.