The Central government has suggested a new, improved Goods and Services Tax (GST) structure that attempts to make rates more logical and cut down on the number of tax bands. The plan, which comes just hours after Prime Minister Narendra Modi’s speech on Independence Day, calls for new rates and tax breaks on things people use every day.
PM Modi said from the Red Fort that “next-generation” GST changes would be in place by Diwali. He said that taxes on things that regular people buy would go down a lot, which would be good for both citizens and Micro, Small, and Medium Enterprises (MSMEs).
Important Changes in the Proposed GST Structure:
New Rates: The administration wants to set two new main rates: 5% and 18%. Luxury products would be charged a special 40% tax.
migrate from 12% to 5%: Government sources said that 99% of the items that are now in the 12% GST slab would migrate to the 5% category.
Change from 28% to 18%: About 90% of the things that are taxed at 28% would transfer to the 18% level. This change should increase spending and make up for any loss of revenue.
Things People Use Every Day: Things that the average person uses would probably be taxed at 5%.
A 40% GST would be added to tobacco items, keeping the total tax rate at the present 88%.
Petroleum goods: Diesel, gasoline, and other petroleum goods would not be subject to the GST.
A Group of Ministers (GoM), which includes state finance ministers, is already working on lowering the GST rates and making them more fair. The Prime Minister also said that a task force would be established up to suggest all the GST changes that are needed for the 21st century in a timely manner.