GST Council starts two today meeting to discuss two slabs, tax cuts

The Goods and Services Tax Council started its two today meeting meet in New Delhi to discuss the centre's proposal of two-slab GST rate, continuing with tax slab of 5% and 18% and a special tax slab of 40% for luxury items.

The proposal also includes removing the 12% and 28% tax slab and shifting items to 5%, 18% and 40% slab.

The two slab tax structure, which aims to bring almost all the essential items, including food, beverage, toiletries used by the middle class to 5% slab, and cut the GST rate on automobile, insurance and cement, essential medicines and agriculture products giving relief to middle class, farmers, businesses ahead of festive seasons.


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The proposal is endorsed unanimously by all the states, however few opposition ruled states want the council to considering compensating the states for revenue loss to states, which, will be discussed along with compensation cess, which centre aims to do away with by October.

The council will also consider structural changes, easy GST registration and refund process and pre-filled return forms to make compliance easier.

The reform once approved by the council may boost the consumption by Rs 1.98 lakh crore annually, reduce inflation by upto 25 basis points, economist says.

This will also improve ease of doing business and reduce compliance burden.

Revenue Protection

The eight opposition-ruled states met just ahead of the council meeting seeking revenue protection while backing the rate rationalisation.

Eight states, including Himachal Pradesh, Jharkhand, and Kerala, have expressed concerns over potential revenue losses due to the proposed GST rate rationalization, which they roughly pegged at Rs 1.5-Rs 2 lakh crore.

Opposition states are demanding compensation for losses, which can be done by extra taxation on tobacco and other sin goods.

Andhra Pradesh Chief Minister Chandrababu Naidu has expressed support for the Centre's proposals, saying they will ease the burden on the government and people, revive the Indian economy, and bring positive change to people's lives.