BIG GST Overhaul! Centre Proposes New GST Rates of 5%, 18%; 90% Of Items in 28% Bracket To Be Shifted To 18%

In a major Goods and Services Tax regime revision, the central government has proposed to shift 90% of items in 28% bracket of GST to 18%. Under the revised GST slab structure, the government has proposed to keep only two brackets of 5% and 18%, reported news agency Press Trust of India (PTI) on Friday.

The development came hours after Prime Minister Narendra Modi announced the introduction of the revised GST regime in October during Diwali celebrations this year.

Daily Use Items To Be Taxed At 5%

Common man items and daily use products like dairy products, grocery items, etc, are likely to be taxed at 5% rate in the revamped GST regime. The government has also announced to keep certain items, including cigarettes, in the special 40% GST. The 40% GST slab will mostly include luxury goods and imported products, reported PTI. GoodReturns couldn't independently verify the development.

Petroleum Products To Be Kept Outside GST Regime

The revamped indirect tax structure, ie GST will not include petroleum products. These products are already outside GST regime and will continue to remain outside after the revision, reported PTI citing sources. The government expects that the GST revamp will give consumption a big boost, which will offset revenue loss due to rate rationalisation, according to PTI.

PM Announces Big Diwali Gift For Taxpayers!

While delivering the Independence Day speech, earlier today, PM Modi said that the revised GST slabs will be introduced during Diwali. PM Modi on Friday announced the introduction of a next-generation GST tax regime, which will significantly benefit the MSMEs and small businesses with its low rates. The next Gen GST is expected to be announced this Diwali. However, there is no confirmation about its implementation and other features in it.

"I am going to give a great gift this Diwali. Over the past eight years, we implemented a major GST reform and simplified taxes. Now, the time has come for a review. We have conducted it, consulted with states, and are set to introduce a 'next-generation GST reform," said PM Modi in his Independence Day speech on Friday.

What To Expect From Revised GST Regime?

While the government is yet to notify the changes in revised GST regime, the Ministry of Finance on Friday released information about the proposed changes by the central government. The proposed reform include rationalisation of tax rates. The move would benefit all sections of society, especially, the common man, women, students, middle class, and farmers, stated MoF in a press release.

The reforms would also help in the growth of MSME business by ensuring ease of doing business. The GST reform would reduce classification-related disputes, correcting inverted duty structures in specific sectors. The move would ensure greater rate stability. The measure would also strengthen key economic sectors and would stimulate economic activity and also fuel sectoral expansion.