GST Reform: Now there will be only 5% and 18% slabs in GST, decision may be taken soon..

The Finance Ministry said on Friday that it has suggested a new GST structure to the Group of Ministers (GoM). According to information received from government sources, GST will now have slabs of 5% and 18%. Let us tell you that Prime Minister Narendra Modi announced on the 79th Independence Day that the reforms in GST will be implemented by Diwali. This will reduce the tax burden and benefit small industries.

After the PM's announcement, the Finance Ministry said that the proposal given to the GoM is based on three things. First is to improve the structure, second is to simplify the tax rates, and third is to make people's lives easier. The proposal talks about reducing taxes on things needed by the common people and ambitious things. There is a suggestion to reduce the slab to two levels: standard and merit. Special rates will apply only to selected items.

There are 4 GST slabs at present.
At present, there are 4 slabs of GST, which have rates of 5%, 12%, 18% and 28%. The GST Council, headed by Finance Minister Nirmala Sitharaman, will meet in September to discuss the proposal of the GoM. The ministry says that the end of the compensation cess has given more flexibility to the government, which will help in simplifying and stabilizing the tax rates.

What is the benefit to industry and business?

The new GST system will fix the inverted duty structure, reduce disputes over tax classification, and make business planning easier due to stability in rates. Online registration and pre-filled returns will be available for MSMEs and startups, which will save them time and money. Exporters will benefit from the automated refund process.

What is the impact on revenue and the economy?

In 2024-25, GST collection reached a record level of Rs 22.08 lakh crore with a growth of 9.4%. The government says that the new reforms will increase consumption, accelerate economic activity, and give more speed to formalization in the country. This will boost both revenue and the economy.

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