New Delhi: In a landmark move to simplify the Goods and Services Tax (GST) system, the Central Government has proposed eliminating the existing 12 percent and 28 percent GST slabs, retaining only 5percent and 18 percent, sources confirmed on Friday.
According to officials, about 99 percent of items currently taxed at 12 percent will move to the 5 percent slab, while 90 percent of goods in the 28 percent slab will be shifted to 18 percent. Most consumer goods presently in the highest tax bracket are set to benefit from this reduction. Additionally, a new 40 percent GST slab is proposed for “sin goods” such as tobacco and pan masala.
This initiative aligns with Prime Minister Narendra Modi’s Independence Day announcement, where he promised a “big gift” to citizens this Diwali in the form of sweeping GST reforms. The government has already sent its proposal to state governments and the Group of Ministers (GoM) under the GST Council for review.
The GoM is expected to examine the proposal ahead of a GST Council meeting scheduled for September-October, where the changes will be discussed and finalized.
Speaking from the Red Fort, PM Modi highlighted the need to revisit GST after eight years of implementation:
“This Diwali, I am going to make it a double Diwali for you. This Diwali, you fellow countrymen are going to get a very big gift. In the last 8 years, we have done a big reform of GST, reduced the tax burden across the country, simplified the tax regime and after 8 years, the need of the hour is that we should review it once. We started the review by setting up a high-power committee and also held discussions with the states.”
He further added:
“We are coming with the next generation of GST reforms, this will be a gift for you this Diwali, taxes needed by the common man will be reduced substantially, a lot of facilities will be increased. Our MSMEs, our small entrepreneurs, will get a huge benefit. Everyday items will become very cheap and that will also give a new boost to the economy.”
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