GST couricil meeting: The two -day meeting of the GST Council is going to be held from Wednesday. The country and the world have a special eye on this meeting being held ahead of time. Because after the announcement of PM Modi of GST Reform, steps will be taken in that direction. In this, ambitious changes in Goods and Services Tax (GST) may be considered to reduce tax on daily use items.
The GST reform will be taken during the meeting of this GST Council under the chairmanship of Union Finance Minister Nirmala Sitharaman. In the proposed reforms, the current 12% and 28% tax slabs are prominent to keep two tax rates of only 5% and 18%. Apart from this, a special rate of 40% will be done on a few selected items.
Why GST Council is important
The tax slab cut and the decrease in prices due to this has been commonly welcomed. But the states ruled by opposition parties are demanding compensation for the loss in revenue due to this change.
Prime Minister Narendra Modi in the Independence Day speech on 15 August told about the plan of GST reforms. Soon after, the Central Government shared a blueprint for the proposed improvement with a group of ministers (GOM) of various states for initial review.
GOM has agreed to the proposal of the center to reduce tax rates. The council will consider these recommendations on 3-4 September.
The news agency PTI quoted sources as saying that the Group of Ministers has supported the imposition of 18% GST on an electric vehicle priced up to Rs 40 lakh, while agreeing hard to the changes in the slabs. However, the central government wants to encourage electric vehicles and is supporting 5% rate for them.
What can be big changes
-
Ghee, dry fruits, 20 liters of drinking water, salty, some shoes and costumes, medicines and medical equipment are likely to be reduced from 12% to 5% tax slab.
-
Objects like pencils, bicycles, umbrellas and hair pin can also be brought into 5% slab.
-
Taxes on electronic goods like TV, washing machine and refrigerator can be reduced from 28% to 18%.
-
At present, the highest rate and compensation cess of 28% is applicable to vehicles. 18% rate will be applicable to early level cars. At the same time, a special rate of 40% will be applicable on SUVs and luxury cars.
-
A special rate of 40% will also be applicable to the objects like tobacco, paan masala and cigarettes. Additional tax can also be levied on this category on this category.
Opposition states like West Bengal have demanded that any tax imposed above the rate of 40% be shared with the states. So that their revenue deficit can be compensated. Eight states ruled by opposition parties include Himachal Pradesh, Jharkhand, Karnataka, Kerala, Punjab, Tamil Nadu, Telangana and West Bengal.
