Major GST shake-up: 12% and 28% slabs to be axed , Pg1

Key Highlights:

• The Centre proposes a GST slab restructuring, retaining 5% and 18% while eliminating 12% and 28% slabs.
• Approximately 99% of items from the 12% slab will move to 5%, and 90% from 28% to 18%.
• A lower concessional rate (below 1%) and a higher "sin rate" of 40% will be applied to a limited number of goods.
• The GST Council will likely discuss and implement these reforms within this financial year, following GoM recommendations.

Detailed Insights:

• The proposed GST reforms aim to reduce the tax burden on the common man and boost consumption through lower rates.
• The 18% slab currently contributes the most to GST revenue (67%), while 28%, 12%, and 5% slabs contribute 11%, 5%, and 7% respectively.
• Rates on aspirational items like white goods may be reduced; daily-use items like toothpaste, soap, and shampoo could also see rate reductions.
• The Centre also proposes using technology to streamline GST registration, implement pre-filled returns, and expedite refunds.
• Correcting the inverted duty structure is a key proposal to ease working capital issues for businesses.

Key Concepts Involved:

• Goods and Services Tax (GST): An indirect tax levied on the supply of goods and services.
• Inverted Duty Structure: When the tax rate on finished goods is lower than the tax rate on inputs.
• Group of Ministers (GoM): A body constituted by the GST Council to examine and make recommendations on specific issues related to GST.