Most goods, services under GST to be in 5 per cent and 18 per cent slab
There will be two main slabs of 5 per cent and 18 per cent, with hardly five to seven items like tobacco, pan masala etc. falling under the sin good category. As of now, the rates on sin goods would remain unchanged. The Finance Ministry sources said, 99 per cent of the items which were previously under 12 per cent slab, will now be under 5 per cent slab.
Centre has adopted a three-pillar approach to implement the structural change in the existing GST system. Three major areas of focus under this approach have been structural reform to address the challenges arising due to inverted duty structure, bring rate rationalization to do away with multiple tax rates and to ensure ease of compliance primarily for small and medium businesses.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
&w=3840&q=100)
Business Standard
an hour ago
- Business Standard
PM Modi chairs top-level meet to discuss roadmap for next-gen reforms
Union ministers Rajnath Singh, Amit Shah, Nitin Gadkari, Nirmala Sitharaman, Shivraj Singh Chouhan, Piyush Goyal and Lalan Singh attended the meeting Press Trust of India New Delhi Prime Minister Narendra Modi on Monday chaired a high-level meeting, which included top Union ministers, secretaries and economists, to deliberate on the roadmap for the next generation reforms, one of the key announcements he had made in his Independence Day address. Union ministers Rajnath Singh, Amit Shah, Nitin Gadkari, Nirmala Sitharaman, Shivraj Singh Chouhan, Piyush Goyal and Lalan Singh attended the meeting. Modi had on August 15 announced the formation of a task force for 'next-generation reforms' and revision of GST laws, as he devoted a major part of his 103-minute speech on making India self-reliant in a host of sectors ranging from semiconductors to fertilisers. (Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
NDTV
an hour ago
- NDTV
Centre, States Equal Stakeholder In GST, Revenues Shared Equally: Report
New Delhi: Amid concerns about the revenue impact of the Centre's pro-middle-class 'Next Gen GST' with a proposed two-slab structure, government sources clarified that the Centre is an equal partner in revenue sharing with the states and that its proposal anticipates a revenue boost over time, driven by increased consumption. Under the current Goods and Services Tax (GST) framework, revenues are shared equally between the Centre and the states. Additionally, 41 per cent of the Centre's share of the divisible tax pool is allocated to states as per the Finance Commission's recommendations. "Centre has equal concerns over what is being collected and what will be collected in GST. As members of the GST Council, both are equal partners. In such a setup, is it fair to expect that the Government of India will sit as a donor to compensate states?" a government source said. Currently, Goods and Services Tax (GST) is a 4-tier structure with tax rates at 5 per cent, 12 per cent, 18 per cent, and 28 per cent. Food and essential items are either taxed at nil or a 5 per cent rate, and luxury and sin items are at 28 per cent. The 5 per cent slab accounts for 7 per cent of total GST revenues, while the 18 per cent slab accounts for 65 per cent. The 12 and 28 per cent slabs give 5 and 11 per cent share, respectively, in the GST kitty. The Centre has proposed to the Group of Ministers on GST rate rationalisation a 2-tier rate structure of 5 per cent and 18 per cent for 'merit' and 'standard' goods and services, and a 40 per cent rate for about 5-7 goods. The proposal entails doing away with the current 12 and 28 per cent tax slabs. Currently, states have exclusive taxation rights over land and petroleum products. Also, the Centre, under a special assistance scheme, is giving a 50-year interest-free loan for capital expenditure to states. Besides, the health and education cess and other cess collected by the Centre go towards funding state development and welfare needs through various central government schemes and initiatives. Compensation cess, which goes entirely to the states, accounts for a substantial chunk of the total cess collected by the Central Government. Another source said that calculations show that GST revenues will go up on a sustained basis once the new 2-tier slab is implemented. "Similar revenue concerns were expressed when the compensation cess period ended in June 2022. But GST revenues have improved over time, and the average tax buoyancy of states improved to 1.23 as against 0.65 pre-GST. With GST reforms proposed by the Centre, tax buoyancy will improve steadily," the second source said. The compensation cess mechanism was initially put in place for a 5-year period till June 30, 2022, to make up for the revenue loss suffered by states on account of GST implementation. GST had subsumed over a dozen local taxes and levies and was rolled out on July 1, 2017. The levy of compensation cess was later extended by 4 years till March 31, 2026, and the collection is being used to repay the loan that the centre had taken to compensate states for the GST revenue loss during the COVID period.
Mint
an hour ago
- Mint
GST rate cut hopes drive nearly ₹1 lakh crore rally in Nifty auto stocks
Maruti Suzuki, Hyundai Motor, TVS Motor Company, and other auto stocks saw a massive rally in Monday's session after the government announced plans for sweeping changes to the goods and services tax (GST) regime. Analysts believe the reforms could revive demand in the auto sector, which has remained muted in recent quarters. Fourteen out of the 15 constituents of the Nifty Auto index closed with sharp gains, led by Maruti Suzuki, which surged 8.8% to ₹ 14,068 apiece, its biggest intraday jump in the last five years. Other major gainers included Ashok Leyland, TVS Motor Company, Hero MotoCorp, MRF, Mahindra & Mahindra, and Eicher Motors, all rising between 2.6% and 8%. The rally boosted the combined market capitalization of the 14 auto stocks by nearly ₹ 1 lakh crore, taking the sector's total m-cap to ₹ 22.56 lakh crore. In his Independence Day address, Prime Minister Narendra Modi announced significant GST reforms, the most comprehensive since the rollout in 2017, announcing the ushering in of a two-tier GST structure—a reform billed as the 'next generation of GST,' expected to take shape by Diwali, as per sources. The current GST tax structure has four main categories of rates, at 5%, 12%, 18%, and 28%. The proposed changes will see the number of categories reduced to two, with most goods that were taxed at 12% and 28% now taxed at the lower rate of 5% and 18%, respectively. Even though changes to the GST had been discussed for years, the timing of the announcement in Modi's Independence Day speech was a surprise to many. The move comes against the backdrop of President Donald Trump's threat to double tariffs on Indian exports to the US to 50% by August 27 to penalize the country for buying oil from Russia. Automobiles, currently under the 28% slab, would move to 18% if the proposal is approved, which analysts believe could lead to price cuts and potentially revive sales. Auto manufacturers have been struggling in recent quarters amid weak urban demand, with many shifting focus to exports to sustain growth. Hero MotoCorp and Bajaj Auto both reported muted sales growth in the June quarter, while Maruti Suzuki and Hyundai Motor also posted flat passenger vehicle sales. If implemented, the GST cut would offer much-needed relief for the Indian automobile sector. 'Autos fall under the 28% GST bracket. If autos move to 18% and we see sharp price drops, this could drive the next auto upcycle, similar to 2008,' said Morgan Stanley. 'Currently, GST on passenger vehicles ranges from 29% to 50%, as a cess is imposed on top of GST based on the vehicle's size and engine capacity. In the new regime, the government may reduce the tax on smaller cars to 18% (from 28%) and move bigger cars to a 'special rate' of 40% while scrapping the cess. This could lower prices of smaller cars by around 8% and larger cars by 3–5%,' HSBC noted. GST reduction would negatively impact government revenues in the near term but drive-up Auto demand and hence job creation in India. PVs generate USD14-15 billion in GST collection, and 2Ws USD 5 billion, said the brokerage. Domestic brokerage Motilal Oswal added that passenger vehicles and commercial vehicles, currently taxed at 28%, will benefit most from the cut. Maruti Suzuki, Tata Motors, and Ashok Leyland are well positioned to gain from lower effective prices and higher volumes.
