Centre’s GST reforms will benefit the poor and middle class: Modi , Pg1

Key Highlights:

• Prime Minister Narendra Modi announced upcoming GST reforms aimed at benefiting the poor, middle class, traders, and entrepreneurs.
• The new GST structure will feature 18% and 5% rates, simplifying tax categories and compliance.
• The Centre anticipates that reduced tax rates will be offset by increased economic buoyancy and improved compliance.
• The government aims to implement the new tax structure by Deepavali (October 20), pending approval from the GST Council.

Detailed Insights:

• The proposed GST reforms stem from the vision of advancing good governance through continuous improvement and next-generation reforms.
• The new GST regime intends to make taxation more equitable, with a consumer-centric approach that will be explained to the States.
• Most items in the 28% GST bracket will move to 18%, while exceptional items or "sin goods" may be placed in a 40% bracket.
• Two Groups of Ministers (GoMs), one on rate rationalization and another on compensation cess, will review the changes before the GST Council's approval.
• The compensation cess, currently applied to sin goods like tobacco, may cease before its legal end-date of March 31, 2026, necessitating a GST revamp.

Key Concepts Involved:

• Goods and Services Tax (GST): An indirect tax levied on the supply of goods and services.
• GST Council: A constitutional body responsible for making recommendations on GST-related issues.
• Compensation Cess: A levy imposed on certain goods to compensate states for revenue losses due to GST implementation.