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PM Narendra Modi said the revised GST framework proposed by the Centre has been circulated among states. He sought their cooperation to implement the proposal before Diwali
PM Narendra Modi had announced the proposal to reform the GST law during his Independence Day speech on August 15 from the ramparts of the Red Fort. (Image for representation: News18)
The three panels of state finance ministers will meet on August 20 and 21 to review the draft of the next-generation GST reforms, including proposals to rationalise the tax structure.
The panels, called the Groups of Ministers (GoM), have been set up by the Goods and Services Tax (GST) Council to look into rate rationalisation, insurance, and compensation cess.
Prime Minister Narendra Modi on Sunday said the revised GST framework proposed by the Centre has been circulated among states. He sought their cooperation to implement the proposal before Diwali.
According to a report by Money Control, the recommendations of the three GoMs will be taken to the GST Council, which is expected to meet next month to deliberate on the tax reform proposal.
WHAT DOES THE REVISED GST FRAMEWORK PROPOSE?
Modi had announced the proposal to reform the GST law during his Independence Day speech on August 15 from the ramparts of the Red Fort.
The present GST tax rates of nil/zero on essential food items, 5 percent on daily use products, 12 percent on standard goods, 18 percent on electronics and services and 28 percent on luxury and sin goods will be replaced by two tax slabs of 5 percent and 18 percent plus a special 40 percent top bracket for five to seven demerit goods.
Here’s what the proposed two-slab regime looks like:
- If approved by the GST Council, the two-slab regime will replace the current four slabs doing away with the 12% and 28% slabs.
- As many as 99% of items in the 12% category, such as butter, fruit juices and dry fruits, will move to a 5% tax rate.
- Similarly, electronic items like air-conditioners, televisions, refrigerators, and washing machines, as well as other goods like cement, will be among the 90% of the items that will move from 28% to a lower 18% slab.
- According to highly placed sources, a special tax rate of 40% — the maximum rate allowed under the GST law — will be charged for demerit and sin goods like tobacco, gutka, and pan masala, as well as online gaming.
- About 20% of items, including packaged food and beverages, apparel and hotel accommodation, are currently taxed at 12% GST and account for 5% to 10% of consumption and 5% to 6% GST revenue. Moving them to a lower 5% slab may lead to revenue loss, but the Centre is hopeful that a boost in consumption will be able to make up for the deficit.
The move comes amid the Trump administration’s 50 percent tariff imposition on all goods India exports to the United States, so as to punish New Delhi for buying Russian oil. The tariffs are likely to impact $40 billion of non-exempt Indian exports such as gems and jewellery, textiles and footwear.
(With PTI inputs)
The News Desk is a team of passionate editors and writers who break and analyse the most important events unfolding in India and abroad. From live updates to exclusive reports to in-depth explainers, the Desk d…Read More
The News Desk is a team of passionate editors and writers who break and analyse the most important events unfolding in India and abroad. From live updates to exclusive reports to in-depth explainers, the Desk d… Read More
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