New Delhi: The 56th meeting of the GST Council, slated for September 3-4, will decide on the Group of Minister’s (GoM) proposal to retain two slabs — 5 per cent and 18 per cent.
As per an official statement, the Council meeting comes amid the Centre’s mega push to reform the GST taxation regime’s structure into two slabs, from four at present.
According to Bihar Deputy Chief Minister Samrat Choudhary, who leads the six-member GoM, “we have recommended a two-slab GST structure and submit our recommendations to the GST Council”.
The GoM agreed that the existing 12 per cent and 28 per cent slabs will be scrapped under the new regime. The objective is to move toward a simpler and more transparent GST regime.
The country currently follows a four-slab GST system — 5 per cent, 12 per cent, 18 per cent, and 28 per cent — along with an additional cess on sin and luxury goods.
Under the new structure, ‘merit’ goods and services will attract 5 per cent GST, while most other items (standard) will come under an 18 per cent standard rate. A higher 40 per cent levy will remain on a small set of so-called sin goods. Examples include alcohol, tobacco, drugs, gambling, soft drinks, fast food, coffee, sugar, and even pornography.
A sin tax is a special tax that the government puts on such goods. The purpose is to discourage people from using them and to reduce the harm they can cause.
Finance Minister Nirmala Sitharaman, addressing the two-day GoM meeting earlier, had said that a simplified system would benefit the common man, farmers, the middle class and small businesses, while also making GST more transparent and growth-oriented. As part of the changes, almost all items currently in the 12 per cent category will move to the 5 per cent slab.
Similarly, most products taxed at 28 per cent will shift to the 18 per cent bracket, which the Centre believes will improve compliance and reduce complexity.
The GoM also reviewed the Centre’s suggestion to exempt GST on individual health and life insurance premiums. The final decision on the recommendations will be taken by the GST Council in its meeting in early September.