Last Updated:
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 Controlthe 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.
The proposed two-slab regime, if approved by the GST Council, will replace the current four slabs in the Goods and Services Tax (GST) regime, doing away with the 12 per cent and 28 per cent slabs.
As many as 99 per cent of items in the 12 per cent category, such as butter, fruit juices and dry fruits, would move to a 5 per cent tax rate. Similarly, electronic items like ACs, TVs, fridges, and washing machines, as well as other goods like cement, will be among the 90 per cent of the items that will move from 28 per cent to a lower 18 per cent slab.
About 20 per cent of items, including packaged food and beverages, apparel and hotel accommodation, are currently taxed at 12 per cent GST and account for 5-10 per cent of consumption and 5-6 per cent GST revenue.
Moving them to a lower 5 per cent slab may lead to loss of revenue, but the Central government is hopeful that a boost in consumption would be able to make up for the deficit in the next few months.
A special tax rate of 40 per cent – the maximum rate allowed under the GST law – would be charged for demerit and sin goods like tobacco, gutka, and pan masala, as well as online gaming, highly placed sources told reporters soon after the prime minister’s announcement of GST revamp in his Independence Day address to the nation.
The changes that have come about after nearly six months of deliberations and dozens of meetings have been conceived in a way to ensure that demand for tax tweaks does not arise, and also that input tax credit (ITC) does not get accumulated in the system.
The move comes after US President Donald Trump imposed a 25 per cent tariff on all goods India exports to the US, and planned doubling of the levy to 50 per cent from August 27 to punish New Delhi for its oil purchases from Russia. The tariffs are likely to impact USD 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
view comments
Read More
Source link
[ad_3]
