Respite in GST? Centre to bring down most taxable items in 28% bracket to 18%, as per report
Prime Minister Modi announced a major GST reform as a Diwali gift, promising significant changes to tax rates. The proposed changes involve shifting most items from the 28% tax bracket to an 18% slab, along with a reduction of essential goods to a 5% rate.
New Delhi: In what may come as a massive respite in the present GST structure, the government, in all probability, is going to announce something huge, according to a report by PTI.
The reportedly impending announcement will bring the products used in daily life in 5 per cent category. Also, it will slash the tax rate of 90 per cent of the items which fall in the tax bracket of 28 per cent to 18 per cent, as per the report. Moreover, most of the items under the 12 per cent GST tax slab will be moved to the 5 per cent bracket.
The promise by PM Modi
Notably, during his Independence Day speech from the ramparts of the Red Fort on Friday, Prime Minister Narendra Modi promised reforms in the next generation Goods and Services Tax (GST) as a Diwali gift for the country.
He said, "This Diwali, I am going to give you a 'double Diwali' gift. A major announcement is coming for the people of the country. Over the past eight years, we implemented a major GST reform that significantly reduced the tax burden across the nation. Now, after eight years, the time has come to review it. We have formed a high-powered committee to begin this review process and have held consultations with the states as well. We are now bringing in next-generation GST reforms. This will become a Diwali gift for the nation."
He added, "Tax rates on essential goods and daily needs will be reduced under a simplified framework. This will bring significant relief and convenience. Our MSMEs and small industries will also benefit greatly from these changes."
What will be the changes in the GST?
According to the PTI report, the products used in daily life will be taxed at 5 per cent in the changed GST regime. Under the revamped GST regime, the government has reportedly proposed two rates, 5 per cent and 18 per cent.
The report further stated that 90 per cent of taxable items which are in the 28 per cent bracket will probably be shifted to the 18 per cent slab in the revamped regime. Also, there will be a special 40 per cent GST on luxury goods. At present, the brackets in the GST are at 5 per cent, 12 per cent, 18 per cent and 28 per cent on most goods and services, excluding gold and silver, while there is an extra levy on demerit items like cigarettes and high-end cars.
In the revamped regime, there can be a 40 per cent GST on tobacco products. However, petroleum products won't come under the GST regime as is the case at present.