Addressing the nation on the eve of the 79th Independence Day, Prime Minister Narendra Modi announced “next-generation GST reforms” to be implemented by Diwali this year. The reforms will ensure a reduced tax burden on the citizens. It is reported that the reforms are likely to reduce the tax slabs, and the commodities in the 12 % bracket may come down to 5 % while those in the 28 % slab will be in the 18 % slab in the proposed reforms. A new feature of these reforms is the introduction of a 40 % slab, which will be imposed on goods categorised as sin goods.
The GST reforms will ultimately benefit the consumers, as it is an indirect tax where the final burden of payment lies on the consumer. As per sources, goods used in everyday life will become cheaper after the implementation of reforms. This includes things like medicines, groceries, Television, washing machines and similar items. Agriculture inputs may also become cheaper and benefit the farmers. The number of slabs is also expected to come down as a result of the reforms, and there will only be three slabs: 5 %, 18 %, and 40 %.
The 40 % slab, the latest introduction, will include goods like tobacco and activities, including online betting.
Goods included in the 12 % slab include the likes of dry fruits, condensed milk, frozen vegetables, jam, pasta, sausages, toothpastes, carpets, bicycles, furniture, utensils, stationery items, and footwear. The recommendations from the Central government have been forwarded to the Group of Ministers responsible for GST rationalisation. The proposal will thereafter be introduced to the GST council, the leading body managing GST affairs in the country, headed by the Finance Minister and consisting of finance ministers from all the states and Union territories of the country. The council has the power to either accept or reject the proposal, with or without any modifications.
The Prime Minister has also informed that discussions with states have been made to reduce the tax burden of the people, and by Diwali, the new changes can be expected in the GST slabs.
