The group of ministers of the states formed to restructure the rates of Goods and Services Tax i.e. GOM on Thursday approved two new proposals of the Central Government. Under these proposals, the existing four slab structure will be changed to two slabs- 5% and 18%. Also, it has been decided to abolish 12% and 28% tax slab. Bihar Deputy Chief Minister and Convenor of Rate Reorganization Group, Samrat Chaudhary said after the meeting that both the proposals of the Central Government have been accepted by a group of ministers formed on reorganization.
40% GST on luxury and ‘Sin Goods’
Uttar Pradesh Finance Minister Suresh Kumar Khanna said that the central government has proposed to impose 40% GST on extremely luxurious items and ‘Sin Goods’ (such as alcohol, cigarette, luxury cars etc.). On this, West Bengal Finance Minister Chandima Bhattacharya suggested that an additional cess (levy) should also be imposed above 40% tax, so that the current tax burden (28% + cess) on these goods. Bhattacharya also expressed concern that in the proposal of the Center, it was not told how much revenue the governments would suffer after the new rates were implemented.
Current GST rates
Currently four main GST tax slabs are applicable in India: 5%, 12%, 18% and 28%. Everyday items usually levy 0% or 5% tax. Luxury items and ‘Sin Goods’ are levied at 28% tax + different rates.
What will be the process ahead?
These recommendations of GOM will now be sent to the GST Council. These changes will be applicable only after the approval of the council. If approval is received, it will be considered the biggest improvement in the GST system so far. This step is considered important towards making the tax system more simple and transparent, which can benefit both businessmen and consumers.
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