India's GST Revamp: Major Overhaul in Tax Regime Unveiled

Finance Minister Nirmala Sitharaman presented significant GST reforms to state ministers, proposing reductions in tax rates and easing compliance. Discussions focused on rate rationalisation and compensation cess adjustments. The reforms could lead to noticeable revenue losses, with an anticipated rollout by Diwali.

In a bid to transform the Goods and Services Tax (GST) regime, Finance Minister Nirmala Sitharaman unveiled plans aimed at reducing tax rates and easing the compliance burden for businesses. The proposals were presented to the group of ministers (GoMs) from various states on Wednesday.

Over the course of two days, the GoMs delved into discussions on rate rationalisation, insurance taxation, and compensation cess as part of New Delhi's 'next-gen' GST reforms. The government aims to levy tax at simplified rates of 5 and 18 percent, with a special 40 percent rate suggested for certain 'sin goods'.

While the proposals mark a significant restructuring from the current 5 to 28 percent rate slabs, implementation could potentially result in an annual revenue loss of Rs 85,000 crore. The revised schemes, which were subject to thorough evaluation on August 21, are expected to be rolled out by Diwali.