BIG Relief For Households! GoM Nods GST Restructuring To 5%, 18% Slabs, Lowering Prices Across Segments

The highly anticipated Goods and Services Tax (GST) reforms proposal inched closer to turn into a reality after the Group of Minister (GoM) approved the Centre's proposal. The GoM on Thursday approved the central government's proposal to simplify existing GST slabs into two-slab GST structure of 5% and 18%.

In addition to approval the GST reform proposal the GoM has also recommended to scrap the 12% and 28% slabs, stated Bihar Deputy Chief Minister Samrat Choudhary on Thursday, August 21.

Simplification of GST slabs would significantly reduce the prices of daily use items including dairy products, clothes, edible items, etc. Other items like cars, two wheelers, cement products, ac, electronic items, insurance services, etc.

The development has come days after Prime Minister Narendra Modi announced the implementation of big GST cuts across the segments this Diwali. While delivering the Independence Day speech at Red Fort on 15 August, PM Modi had announced that the Centre had proposed to reform GST structure.

Implementation of the GST reform proposal would significantly reduce prices of daily use items and would give a major boost to consumption, said PM Modi on 15 August.

"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 Are The Proposed GST Reforms?

-The government has proposed to reduce GST slabs into two-slab structure. The government has proposed to keep only two GST slabs, ie 18% and 5%.

-The 28% GST slab is expected to be abolished completely.

-Certain items like luxurious goods and even tobacco products will be kept in the miscellaneous categor of 40%.

-The government has proposed to reduce maximum products from the 28% category to 18%.

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.

The Ministry of Finance on 15 August 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.