The central government is set to simplify the Goods and Services Tax (GST) regime, making it more rational and user-friendly. In the latest meeting of the Group of Ministers (GoM), chaired by Bihar Deputy Chief Minister Samrat Chaudhary, a unanimous decision was taken to reduce the GST slabs to just two main rates.
Two GST Slabs Proposed
According to the proposal, the revised GST structure will have two principal tax rates: 5% and 18%.
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5% slab will cover essential and beneficial goods.
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18% slab will apply to most common goods and services.
Additionally, luxury goods and demerit items will continue to attract a higher rate of 40% tax. The existing 12% and 28% slabs are likely to be scrapped.
Impact on Consumers and Traders
The restructuring is expected to bring significant relief to both consumers and businesses. Nearly 99% of items currently taxed at 12% will be shifted to the 5% category, while about 90% of goods taxed at 28% will fall under the 18% slab. This rationalization is likely to reduce market prices and simplify compliance for traders.
Support from States and Centre
The proposal received strong backing from finance ministers of Uttar Pradesh, Rajasthan, West Bengal, Karnataka, and Kerala. Union Finance Minister Nirmala Sitharaman also emphasized that the simplification of GST rates will make the system more transparent, benefiting the common man and improving efficiency in tax collection.
Boost to Tax Compliance
By reducing complexities, the new GST structure is expected to encourage higher compliance and expand the taxpayer base. A simplified tax regime will not only ease business operations but also bring down prices, making it a win-win for both consumers and traders.
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