Dual-Rate GST Reform Could Improve Compliance, Boost Collections: S&P
GST Meet: The proposed two-tier Goods and Services Tax (GST) structure could lower the effective tax rate while boosting fiscal revenues over the long term, said YeeFarn Phua, Director at S&P Global Ratings, on Tuesday.
His remarks come ahead of a key meeting between the Centre and states on August 21-22 to discuss the Centre's GST reform plan. The proposal aims to simplify the current four-slab system—5%, 12%, 18% and 28%—into just two rates of 5% and 18%, along with a special 40% rate on select items.
The government has been pushing for reforms in the GST regime to improve compliance, reduce disputes and make the indirect tax system more efficient. GST, which was rolled out in July 2017, is one of the largest sources of tax revenue for both the Centre and states, but multiple slabs and frequent classification disputes have often complicated implementation.
Phua noted that the present multi-slab GST regime is complex, making accounting and implementation cumbersome. A streamlined two-rate system, he said, could ease compliance and reduce disputes.
'While the effective rate may be marginally lower, simpler implementation and improved compliance could support fiscal revenues in the longer run," Phua said at a webinar. He added that the move is unlikely to hurt overall collections and may even spur consumption in the short term.
As per the Centre's proposal, 99% of goods currently taxed at 12% would move to the 5% slab, while 90% of items in the 28% slab would shift to 18%. The rejig is also expected to reduce classification disputes, litigation and duty inversion issues.
view comments
First Published:
Disclaimer: Comments reflect users' views, not News18's. Please keep discussions respectful and constructive. Abusive, defamatory, or illegal comments will be removed. News18 may disable any comment at its discretion. By posting, you agree to our Terms of Use and Privacy Policy.
Loading comments...
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Economic Times
8 minutes ago
- Economic Times
Cracks in the AI hype? Warning signs suggest the Bubble could soon explode
In March 2000, Barron's asked, 'When will the internet bubble burst?' warning the pop could happen before year-end. On that same day, a top tech company saw its share price drop 60pc, and many others collapsed, wiping out trillions. Now, some Wall Street experts worry the same 'unpleasant popping sound' may hit the AI boom. On Tuesday, tech stocks fell sharply after a report from MIT said most AI investments give 'zero return' for businesses. MIT academics wrote: 'Despite $30-40bn in enterprise investment into Generative AI, 95pc of organisations are getting zero return'. Nvidia shares dropped 3.5pc and Palantir fell 9pc after the report. MIT's findings could be the pin that pops the tech stock bubble, which has increased US stock values by trillions. Since ChatGPT's launch in 2022, Silicon Valley has claimed AI chatbots will transform the economy, promising cost savings and productivity gains. MIT's report suggests the AI revolution has stalled, despite big investments, as reported by The Telegraph. MIT surveyed 150 business leaders and 350 employees, finding only 5pc of AI pilots generate millions in value; the rest show no measurable profit impact. Marko Kolanovic, former JP Morgan head of research, commented: 'Sounds about right for a bubble'. MIT found half of AI projects fail, 80pc of companies explored AI, but only 40pc actually deployed it. Only 20pc of enterprise-grade AI systems reached the pilot stage and just 5pc reached production. ALSO READ: Google Pixel 10 series and Pixel 10 Pro fold launched with AI features and new designs Many employees prefer using consumer AI products like ChatGPT on their own rather than corporate AI tools. The report emphasized: 'AI is already transforming work, just not through official channels'. Despite benefiting from AI, OpenAI CEO Sam Altman warned investors: 'Are investors overexcited? My opinion is yes… some people stand to lose a phenomenal amount of money'. Investors worry about SoftBank, which invested billions in OpenAI; its shares fell 7pc on Tuesday. OpenAI recently launched ChatGPT-5, which underwhelmed users; improvements were seen as small or incremental. Morgan Stanley predicts $3tn will be spent on data centres over three years, mostly fueled by debt, to support AI growth, as stated by The Telegraph. Morgan Stanley also projects AI could add $16tn to the S&P 500 through 40pc salary savings, though MIT's report suggests this may be unrealistic. Meta announced a reorganization of its AI division, including staff reductions, showing even big AI believers are cautious. Mark Zuckerberg has spent hundreds of millions to hire AI engineers at Meta, as per the New York Times the sell-off, the market hasn't collapsed completely; some analysts see it as just a speed bump. Dan Ives, tech analyst at Wedbush Securities, said skeptics of the tech rally will be proven wrong again. Nvidia will report results next week, potentially showing the true state of AI investments in major companies. Ives believes the tech bull cycle will continue for another 2-3 years, but many are still listening for the ominous pop, as mentioned by The Telegraph. Q1. Is the AI boom at risk of a market crash? Yes, experts warn that most AI investments show zero return, which could trigger a tech stock bubble burst. Q2. Are big companies slowing down their AI projects? Yes, many firms like Meta and SoftBank are cautious, with AI projects failing or being scaled back.
News18
15 minutes ago
- News18
Nepals claim on Lipulekh neither justified nor based on historical facts: MEA
Agency: PTI Last Updated: New Delhi, Aug 20 (PTI) India on Wednesday categorically rejected Nepal's objection to a decision by New Delhi and Beijing to resume border trade through Lipulekh pass, saying Kathmandu's claims on the territory are not justified. India and China on Tuesday agreed to resume border trade through Lipulekh pass and two other trading points. The Nepalese foreign ministry on Wednesday objected to the move to resume border trade through Lipulekh pass saying the territory is an inseparable part of Nepal. In 2020, Nepal triggered a border row by issuing a political map that showed Kalapani, Limpiyadhura and Lipulekh as part of the country. India had strongly trashed the claims. External affairs ministry spokesperson Randhir Jaiswal rejected Nepal's territorial claims. 'We have noted the comments of Ministry of Foreign Affairs of Nepal related to resumption of border trade between India and China through the Lipulekh pass," he said. 'Our position in this regard has been consistent and clear. Border trade between India and China through Lipulekh pass had commenced in 1954 and has been going on for decades," he added. Jaiswal said the trade had been disrupted in recent years due to COVID-19 pandemic and other developments, and both sides have now agreed to resume it. 'As regards territorial claims, our position remains that such claims are neither justified nor based on historical facts and evidence. Any unilateral artificial enlargement of territorial claims is untenable," he said. 'India remains open to constructive interaction with Nepal on resolving agreed outstanding boundary issues through dialogue and diplomacy," he added. PTI MPB KVK KVK view comments First Published: August 21, 2025, 00:15 IST Disclaimer: Comments reflect users' views, not News18's. Please keep discussions respectful and constructive. Abusive, defamatory, or illegal comments will be removed. News18 may disable any comment at its discretion. By posting, you agree to our Terms of Use and Privacy Policy. Loading comments...
Time of India
23 minutes ago
- Time of India
Cracks in the AI hype? Warning signs suggest the Bubble could soon explode
In March 2000, Barron's asked, 'When will the internet bubble burst?' warning the pop could happen before year-end. On that same day, a top tech company saw its share price drop 60pc, and many others collapsed, wiping out trillions. Now, some Wall Street experts worry the same 'unpleasant popping sound' may hit the AI boom . On Tuesday, tech stocks fell sharply after a report from MIT said most AI investments give 'zero return' for businesses. MIT academics wrote: 'Despite $30-40bn in enterprise investment into Generative AI , 95pc of organisations are getting zero return'. Nvidia shares dropped 3.5pc and Palantir fell 9pc after the report. AI investments struggle MIT's findings could be the pin that pops the tech stock bubble, which has increased US stock values by trillions. Since ChatGPT's launch in 2022, Silicon Valley has claimed AI chatbots will transform the economy, promising cost savings and productivity gains. MIT's report suggests the AI revolution has stalled, despite big investments, as reported by The Telegraph. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Top 15 Most Beautiful Women in the World Undo MIT surveyed 150 business leaders and 350 employees, finding only 5pc of AI pilots generate millions in value; the rest show no measurable profit impact. Marko Kolanovic, former JP Morgan head of research, commented: 'Sounds about right for a bubble'. MIT found half of AI projects fail, 80pc of companies explored AI, but only 40pc actually deployed it. Only 20pc of enterprise-grade AI systems reached the pilot stage and just 5pc reached production. ALSO READ: Google Pixel 10 series and Pixel 10 Pro fold launched with AI features and new designs Live Events Many employees prefer using consumer AI products like ChatGPT on their own rather than corporate AI tools. The report emphasized: 'AI is already transforming work, just not through official channels'. Despite benefiting from AI, OpenAI CEO Sam Altman warned investors: 'Are investors overexcited? My opinion is yes… some people stand to lose a phenomenal amount of money'. Big companies cautious Investors worry about SoftBank, which invested billions in OpenAI; its shares fell 7pc on Tuesday. OpenAI recently launched ChatGPT-5, which underwhelmed users; improvements were seen as small or incremental. Morgan Stanley predicts $3tn will be spent on data centres over three years, mostly fueled by debt, to support AI growth, as stated by The Telegraph. Morgan Stanley also projects AI could add $16tn to the S&P 500 through 40pc salary savings, though MIT's report suggests this may be unrealistic. Meta announced a reorganization of its AI division, including staff reductions, showing even big AI believers are cautious. Mark Zuckerberg has spent hundreds of millions to hire AI engineers at Meta, as per the New York Times report. Despite the sell-off, the market hasn't collapsed completely; some analysts see it as just a speed bump. Dan Ives, tech analyst at Wedbush Securities, said skeptics of the tech rally will be proven wrong again. Nvidia will report results next week, potentially showing the true state of AI investments in major companies. Ives believes the tech bull cycle will continue for another 2-3 years, but many are still listening for the ominous pop, as mentioned by The Telegraph. FAQs Q1. Is the AI boom at risk of a market crash? Yes, experts warn that most AI investments show zero return, which could trigger a tech stock bubble burst. Q2. Are big companies slowing down their AI projects? Yes, many firms like Meta and SoftBank are cautious, with AI projects failing or being scaled back.
