Next Gen GST Reforms: What’s In It For Common Men, Women, Students, Middle Class, and Farmers?

GST Reforms: Prime Minister Narendra Modi on Friday announced the implementation of next generation of Goods and Services Tax (GST) reforms by Diwali this year. The proposed next-gen GST reforms will be focused on three pillars, ie structural reforms, rate rationalisation, and ease of living, according to the Ministry of Finance.

The central government has sent the proposal on GST rate rationalisation and reforms to the Group of Ministers (GoM). Key areas have been identified for reforms which are likely to be implemented in coming months.

Next-Gen GST Reforms: What's In It For Common People, The Middle Class?

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.

Benefit To MSMEs and Startups

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 mesure would also strengthen key economic sectors and would stimulate economic activity and also fuel sectoral expansion.

Key Pillars Of Next Gen GST Reforms

The changes and improvement in the existing GST slabs have been proposed considering three main aspects, ie structural reforms, rate rationalisation, and ease of living.

Structural Reforms

The government has proposed correction of inverted duty structures to align output and input tax rates. This would not only support domestic value addition, but would also lead to reduction in the accumulation of input tax credit. The proposed changes will also deal with the resolution of classification issues, stability and predictability. The new reforms would resolve classification issues to streamline rate structures, minmise disputes, simplify compliance processes and ensure greater equity and consistency across sectors.

Rate Rationalisation

The reduction in GST rates on certain items would boost consumption and enhance affordability and make essential and aspirational goods more accessible to a wider population. The government has also proposed the reduction of GST slabs and move towards simpler tax with two slabs, ie standard and merits. Under the proposed reforms, only selected few items will be kept under special rates.

Ease of Living

The next Gen GST reforms will also lead to seamless, technology-drivenm and time-bound registration, especially for businesses and startups. There will be implementation of pre-filled returns, and will also reduce manual intervention and elimination of mismatches. The government has also focused on faster and automated processing of refunds for exporters and those with inverted duty structure.