The next GST Council meeting will be held in Delhi on September 3-4, where a decision may be taken to eliminate the 12% and 28% slabs and retain only the 5% and 18% slabs. The government is preparing to provide relief to consumers before Diwali, which could make everyday goods cheaper and strengthen market demand.
New Delhi: A crucial meeting of the GST Council will be held in Delhi on September 3rd and 4th, where significant cuts and reforms in GST rates are likely to be decided upon. The government has proposed eliminating the 12% and 28% tax slabs and retaining only the 5% and 18% slabs, which has already been approved by the GoM (Group of Ministers). It is expected that before Diwali, consumers will be given relief by reducing taxes on ACs, TVs, refrigerators, and everyday items, thereby boosting market demand.
Decision May Settle on Two Slabs
The Council meeting will emphasize simplifying the tax slabs. The government has proposed that GST be limited to just two slabs. This involves retaining the 5 percent and 18 percent GST rates while eliminating the 12 percent and 28 percent slabs. The Group of Ministers (GoM) has already approved this proposal.
GoM Report with the Council
Bihar Deputy Chief Minister Samrat Choudhary had said that the GoM is submitting its report to the Council. He stated that everyone expressed their views on the proposals received from the central government, and these have been sent to the Council. He clarified that the GoM has supported the proposal to eliminate the 12 and 28 percent slabs. The final decision on this matter now rests with the GST Council.
How Many Slabs Will Remain?
After the new changes, only two slabs will remain in the GST system. Almost all products currently in the 28 percent slab will be moved to the 18 percent category. Similarly, 99 percent of the items in the 12 percent slab will move to the 5 percent category. Currently, the 18 percent slab contributes 65 percent of the government's revenue. The 28 percent slab contributes 11 percent, the 12 percent slab contributes 5 percent, and the 5 percent slab contributes about 7 percent.
Which Items Will Get Relief?
The government has suggested reducing taxes on everyday useful items such as ACs, TVs, refrigerators, and washing machines. Currently, these attract 28 percent GST, which is likely to be reduced to 18 percent. In addition, the existing special rates for export and employment-generating sectors will continue. For example, a 0.25 percent GST will remain applicable on diamonds, and a 3 percent GST will remain on gold and silver.
The government plans to keep goods related to the common man and daily use products in the 5 percent GST category. This means that essential goods may become cheaper. Simultaneously, there are preparations to increase the tax on tobacco products to 40 percent. This category will be made stricter to reduce the consumption of products that adversely affect health.
90 Percent of Items to Come Under Relief
Currently, about 90 percent of the products in the 28 percent slab will be brought into the 18 percent slab. This could lead to a reduction in the prices of electronic devices to large household goods. Consumer organizations say that this will strengthen market demand during the festival season.
The industry is also enthusiastic about GST reforms. Businessmen believe that a two-slab system will simplify the tax system and provide clarity to consumers. This will not only increase purchases but also bring transparency to tax collection.
Expectations of a Major Announcement Before Diwali
Considering the festive season, the central government wants to give impetus to the market. If a decision is taken on the tax slabs in the GST Council meeting, consumers could get a major benefit before Diwali. This will not only provide relief to the common man but also offer an opportunity to the industry to increase sales.
