Diwali Delight: Government Proposes GST Reforms to Ease Tax Burden

The Indian government proposes a groundbreaking GST reform by reducing the current slabs to 5% and 18%, scrapping the 12% and 28% rates. The proposal, hinting at significant consumer benefits, has been sent to the states and a GST Council meeting is anticipated for further discussion.

In a significant move aimed at restructuring the Goods and Services Tax (GST) framework, the Indian government has announced plans to eliminate the existing 12% and 28% GST rates in favor of simplified slabs at 5% and 18%. Government insiders revealed on Friday that 99% of items in the 12% category would fall to the 5% rate, while 90% of the 28% items would move to the 18% slab.

According to the sources, consumer goods currently taxed at 28% would shift to the 18% bracket under this proposal. Furthermore, a new 40% slab is proposed for 'sin goods' such as tobacco and pan masala. This initiative aligns with Prime Minister Narendra Modi's Independence Day declaration that citizens would receive a substantial Diwali gift as part of comprehensive GST reforms.

The government has forwarded this proposal to the states and the Group of Ministers (GoM) within the GST Council for consideration. Sources indicate that the GoM will scrutinize the proposal, with a GST Council meeting anticipated in September-October to deliberate further. Prime Minister Modi emphasized during his Independence Day speech that this reform effort seeks to lighten the tax burden, enhance economic facilities, and provide significant advantages to MSMEs and small entrepreneurs, leading to reduced prices on everyday items.

(With inputs from agencies.)