Can Prime Minister Narendra Modi’s promised “substantial” cuts in goods and services tax (GST) come about sooner than anticipated until now? The GST Council — the top decision-making and GST rate-deciding panel chaired by the Finance Minister — is set to meet on September 3 and 4. This will be the 56th meeting of the all-powerful committee, which has state and UT finance ministers as its members.
According to sources, the new GST rates will materialise by Ganpati Visarjan itself, not Diwali.
“This Diwali, I am going to make it a double Diwali for you. This Diwali, you fellow countrymen are going to get a very big gift,” PM Modi said in his address to the nation from the ramparts of Red Fort in the national capital on August 15. Reiterating that his government remains committed to major reforms in the indirect tax framework, PM Modi said that the government had already begun the GST review by setting up a high-power panel and had held discussions with the states.
“Our MSMEs, our small entrepreneurs, will get a huge benefit,” said the PM.
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He also vowed to make a host of everyday items “very cheap” to give “a new boost” to the economy.
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This week, the Finance Minister gave state-level Group of Ministers (GoM) an overview of the Modi government’s intentions for comprehensive GST changes, which include lowering tax rates and reducing the burden of compliance for companies.
GST Council meeting set to decide on 2-rate structure by Ganpati Visarjan
The proposal aims to replace the current four main GST rates of 5, 12, 18 and 28 per cent with just two, 5 per cent and 18 per cent, scrapping the 12 per cent and 28 per cent rates.
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Under the proposed new GST structure, ‘merit’ goods and services will attract a 5 per cent tax, while most other items will be taxed under 18 per cent.
Finance Minister Nirmala Sitharaman had said earlier that a simplified system would benefit the common man, farmers, the middle class, and small businesses, while making GST more transparent and growth-oriented.
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The Group of Ministers reviewed the central government’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 at its next meeting.
Meanwhile, the central government is set to take a hit of Rs 50,000-60,000 crore due to the proposed GST rate cuts, according to sources.
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The Ganpati Visarjan on Anant Chaturdashi is on Saturday, September 6.
The Diwali festival will be celebrated on Tuesday, October 21.
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