GST Council Meeting: What May Get Cheaper; Here's What's In Store For Middle Class?
As many as eight sectors will benefit the most from the rate overhaul, as per the Centre's blueprint for GST reforms.
Finance Minister Nirmala Sitharaman on Wednesday chaired the 56th meeting of the GST Council. The meeting comprising state ministers started deliberations on 'next-gen GST' reforms, which will lower tax rates on items of mass consumption, remove duty inversion in sectors like textiles, and ease the compliance burden for MSMEs.
The Council, over the next two days, will discuss reducing the number of slabs in GST to just two -- 5% and 18% – and removing the 12% and 28% slabs. Also, a special 40% tax has been proposed on a select few items, including tobacco and ultra-luxury goods.
As many as eight sectors – textiles, fertiliser, renewable energy, automotive, handicrafts, agriculture, health and insurance – will benefit the most from the rate overhaul, as per the Centre's blueprint for GST reforms.
GST New Slabs: What's In For Middle Class
As per the sweeping rate change proposal put forth by the Centre and vetted by a group of state finance ministers, here's what's going to get cheaper:
Items down from the 12% category to the 5% tax rate
Butter
Fruit juices
Dry fruits
As many as 99% of items in the 12% category tax rate would be moved to the 5% tax rate.
Items down from the 28% category to the 18% slab
Air Conditioners
Television
Fridge
Washing machines,
Cement
As many as 90% of the items will move from the 28% to a lower 18% slab.
Under the present GST structure, the 18% slab accounts for a lion's share, or 65%, in GST collection. The 5% slab contributes 7% to the total GST kitty. The top tax bracket of 28% on luxury and sin goods contributes 11% of the revenue, while the 12% slab accounts for just 5% of the revenue.
On the 'ease of living' side, the finance ministry's proposal includes seamless, technology-driven GST registration, especially for small businesses and startups. It also suggested the implementation of pre-filled GST returns and faster, automated processing of refunds for exporters and those with an inverted duty structure.
The next-generation GST reforms will be unveiled on Diwali.
Prime Minister Narendra Modi, in his Independence Day speech on Aug. 15, unveiled the plan for GST reforms. Shortly thereafter, the central government shared a blueprint of the planned reform with a Group of Ministers (GoM) from different states for initial vetting.
