Efforts to reform the Goods and Services Tax (GST) in the country have intensified following Prime Minister Narendra Modi's announcement from the Red Fort on August 15. Today marks the beginning of the GST Council's meeting, a two-day event aimed at finalizing decisions on GST rate changes and reducing the four-tier tax slabs to two. The government's objective is to simplify the tax structure and directly benefit consumers. Following these changes, prices of everyday items like milk, cheese, TVs, air conditioners, cars, and bikes are anticipated to decrease.
What Did the Finance Minister Say About GST Reforms?
Implemented on July 1, 2017, GST replaced multiple existing taxes in the country. While the opposition has often criticized it as 'Gabbar Singh Tax', the central government regards it as a significant step towards economic reform. Minister of Finance Nirmala Sitharaman emphasized that the goal is to open up the economy, ensure transparency, and greatly assist small industries.
Source: aajtak
From Four Slabs to Just Two
The central government plans to eliminate the 12% and 28% GST tax slabs, leaving only the 5% and 18% slabs. This was endorsed in a ministerial group meeting following PM Modi's proposal, which he described as a Diwali gift for the nation. Although these GST rate adjustments are expected to result in a revenue loss of approximately 40,000 crores, they promise substantial relief for ordinary citizens.
What Could Become Cheaper?
With the implementation of GST reform proposals, many everyday goods may become more affordable, including items like milk, cheese, snacks, soap, oil, and clothing. If slab changes are enacted, prices of shoes, TVs, ACs, mobile phones, and cars could also see significant reductions. The proposal aims to bring goods like packaged foods, juices, and dairy products under the 5% bracket, making them cheaper.
Source: aajtak
The meeting also looks to expand the zero GST slab, potentially including many essential goods currently in the 5% and 18% brackets. According to a Business Today report, items like UHT milk, packaged cheese, and bread may be considered for the Zero GST slab alongside pizza bases and parathas, which currently face 18%. Changes could also impact goods like cocoa-based chocolates, ice creams, and pastries, potentially reducing the GST from 18% to 5%.
Educational Items Might Become GST-Free
The government is considering making various educational materials GST-free. The council meeting may grant GST exemptions on items such as maps, water survey charts, atlases, globes, printed educational charts, pencils with sharpeners, practice books, graph books, and laboratory notebooks, which currently have a 12% tax.
Additionally, there is a proposal to reduce GST rates on handloom products, shoes under ₹1,000, cement, and ready-mix concrete. Large items currently at the 28% slab, such as electronics and home appliances, could see rate adjustments, benefiting products like ACs, TVs, refrigerators, washing machines, and mobile phones. Small cars and two-wheelers could see a 10% rate cut, moving from 28% to 18%.
