Modi’s ‘double Diwali’ push: Centre plans GST revamp, scraps 12% and 28% slabs to make most goods cheaper
New Delhi: The Central government has proposed a sweeping restructuring of the goods and services tax (GST) regime, seeking to abolish the 12% and 28% slabs—a move aimed at easing prices for a wide range of goods and services and boosting economic activity.
While the shake-up is expected to offer relief to consumers, a senior government official on Friday acknowledged that it could create a short-term revenue gap for the exchequer.
Shift in rates, creation of a new ‘sin goods’ slab
Under the plan, 99% of goods and services currently taxed at 12% will be moved to the 5% bracket. Most products in the highest 28% slab will be shifted to 18%.
Only a handful of ‘sin goods’—such as tobacco products—will be placed in a new 40% slab, which will stand apart as an exceptional rate category.
Timeline and process
The proposal has been sent to a ministerial panel and is expected to be taken up by the GST Council in September or October. The restructuring will also iron out existing tax anomalies and speed up refund processing, the official said.
PM calls it a ‘double Diwali’
Prime Minister Narendra Modi, announcing the revamp during his Independence Day address, described it as a “double Diwali” for citizens.
The changes will also mark the expiry of the GST compensation cess currently imposed on products such as SUVs, tobacco and sugary drinks.
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