India might be considering an important overhaul of the goods and tax on services (GST) structure, as the GST regime comes to an end in July, the year in which states are compensated to end. The restructuring of tax slabs as well as the reduction of exemptions might be considered as the largest overhaul of the tax system which was introduced in the first place.
The new system could include only three major tax rates that cover the majority of the items , compared to the current four that are five percent, 12% 18%, and 28 percent. The reforms will aim to streamline the tax system and increase the revenue.
A ministerial group (GoM) led by Karnataka’s chief minister Karnataka Chief Minister is expected be meeting soon to decide on the recommendations of the group that will be discussed during the next GST Council meeting.
“At the last GST Council meeting a presentation was given on various revenue scenarios… It is for states now to see how they wish to tackle the situation post July,” stated a senior official from the government explaining the main issues discussed at the.
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The Centre compensates states for the loss of revenue resulting from the introduction of GST for five years, which will expire in the year following. States have been concerned about a sharp reduction in their incomes when this compensation expires.
Finance minister of the Union, Nirmala Sitharaman recently said that the tax rate under GST has slid from the non-revenue neutral rate 15.5 percent to 11.6percent “knowingly or unknowingly” due to several rate cuts in the time since GST implementation in July 2017.
Policymakers delay review of Slabs
The state legislatures and the Centre have backed a re-examination of the slabs to deal with the issue of revenue.
The table has options for trimming to the items on your wish list as well as a combination of both ..