The present GST tax rates of nil/zero on essential food items, 5% on daily use products, 12% on standard goods, 18% on electronics and services and 28% on luxury and sin goods will be replaced by by a two tax slabs of 5% and 18% plus a special 40% top bracket for 5-7 demerit goods.
Prime Minister Narendra Modi announced on Sunday that the central government has drafted a proposal for the next-generation Goods and Services Tax (GST) reforms and has sent it to the states. He sought the cooperation of state governments to implement the proposal before Diwali this year. Speaking after inaugurating two new expressways in Delhi, PM Modi emphasised that these reforms would benefit not only the poor and middle class but also both small and large businesses.
GST reforms to ease compliance and benefit all sections of society
PM Modi explained that the proposed changes in the GST law aim to simplify the system and adjust tax rates, which will benefit a wide range of people and businesses. โThis is a major step toward making GST more accessible, especially for businesses and consumers,โ he said. The central government intends to introduce a simplified GST structure and will consider revising tax slabs to reduce the burden on various segments of society.
Double bonus for the public this Diwali
In his Independence Day speech on August 15, PM Modi had already announced plans for these changes, describing them as a step toward promoting good governance. โFor us, reforms mean moving forward with good governance,โ he had said earlier. The Prime Minister reiterated that the government would focus on continuous reforms to make life easier for people and businesses alike. He added, โIn the coming months, we are going to implement several major reforms, and this Diwali, people will get a double bonus from GST reforms.โ
Draft proposal sent to states for cooperation
The draft proposal for GST reforms has already been sent to the states, with the central government hoping for their swift cooperation. PM Modi urged the states to complete the process promptly so that the changes could be implemented in time for the Diwali festival. The primary objectives of these reforms are to simplify the GST process and adjust tax rates to benefit a larger section of the population.
New GST slabs: 5% and 18% proposed
The government has proposed a revised GST system that would streamline the existing tax structure into only two main tax slabsโ5% and 18%. The proposal suggests eliminating the current 12% and 28% tax slabs. Additionally, a special 40% tax slab has been proposed for luxury and harmful goods. The new system aims to reduce tax complexity and ensure more efficient compliance.
GST council to discuss proposal in upcoming meeting
A group of ministers will now discuss the proposal and present their recommendations to the GST Council. An official meeting of the GST Council is expected to take place next month. At present, essential food items are exempt from GST, while daily-use items are taxed at 5%, standard goods at 12%, electronic products and services at 18%, and luxury and harmful goods at 28%.
With this reform, the government aims to make GST simpler, more transparent, and beneficial to the average Indian, offering them a โdouble bonusโ this Diwali.
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