5 years of GST, preparation of 3 tax slabs instead of 4

GST is one of the major changes that have been seen after the coming of Modi government. After a few months, 5 years of the GST regime are going to be completed. Before this, preparations are on to make the biggest change in the GST system so far. These changes include reduction in tax slabs, change in rate brackets, discontinuation of compensation to states, etc.

The target was to make the indirect tax system easy.

The GST Act was passed in the Parliament on 29 March 2017. After this, the government implemented this new system from 1 July 2017. Under this change, the existing indirect taxes like excise duty, value added tax and service tax were merged to form a single indirect tax. The idea behind this was to simplify the system of indirect tax. However, there are still many such products including diesel, petrol, liquor, ATF, which have not yet been included in GST.

Many experts still say that GST is complicated

On the other hand many business organizations and tax experts have been repeatedly reiterating that the GST system is still complex. After the implementation of GST, many changes have been made in it till now. The most important demand of the people is that the number of tax slabs under GST should be reduced. At present, there are 4 slabs under GST of 5 per cent, 12 per cent, 18 per cent and 28 per cent. The government also wants to reduce these to 3.

If the slab is reduced then it will be a loss

If the number of slabs is reduced, then the rates will also be changed. Since the government’s focus is to increase revenue by reducing slabs, most of the items that are in the expiring slab will be taxed. Apart from this, it is also being said that the slab of 5 percent and 12 percent can be increased by 1-1 percent. If this happens, then the lowest slab will become 6 percent and all the goods coming in it will become expensive.

GST compensation of states will stop

After the implementation of the new tax system, a provision of compensation was made for the states. GST compensation is given to the states every month from the central government so that the states do not have to suffer losses on the revenue front. This arrangement is for the next 5 years after the implementation of GST. On July 01, GST will be implemented for 5 years, then the compensation given to the states every month will also stop. Due to this change, the states may have to face a reduction in revenue.

Decision can be taken on the recommendations in this meeting

According to reports, the recommendations related to these changes may be finalized in the upcoming meeting of the Empowered Group of Ministers headed by Karnataka Chief Minister Basavaraj Bommai. After this, when the next meeting of the GST Council will be held, then these recommendations can be considered in it. The council has the right to take any decision related to GST.

GST Council meeting to be held in 2 weeks

The tax rate on some products and services can also be changed in the next meeting of the council. The last meeting of the council was held in December 2021. In that meeting, the decision to increase the tax on some products of the textile industry was taken on hold. After that Finance Minister Nirmala Sitharaman had told that there is a need to discuss more about this. A decision on this can be taken in the next meeting. The next meeting of the GST Council will be held at the end of February or at the beginning of March.