On India’s 79th Independence Day, Prime Minister Narendra Modi promised a massive set of GST reforms to be rolled out by Diwali in his address to the nation. In his speech, he assured tax relief on everyday items, and more importantly, a more friendly tax system.
Accessibility has always been an issue with the current GST norms. The latest was small and medium retail traders protesting against GST notices in Karnataka, when many were slapped with tax notices with arrears going back to 2021.
And now, Modi declared a “big surprise” for all Indians this Diwali. The Centre is expected to bring in new GST reforms in October.
Hailing the news moves as pro-business as well as pro-consumer, the Prime Minister said that daily-use items would become cheaper under the new tax regime. But he did not provide any specifics. No official statement came from the GST council as well.
Of late, the government has been musing on a proposal to completely remove the 12 per cent slab and reassign items to either the 5 per cent or the 18 per cent slabs.
The current system has five tax rates—0 per cent, 5 per cent, 12% per cent, 18 per cent, and 28 per cent. Apart from them, precious metals have special rates like 0.25 per cent and 3 per cent.
Currently, around one-fifth of all goods fall in the 5 per cent. Another one-fifth are taxed at 12 per cent.
However, most items—close to a half or 44 per cent—are under the 18 per cent bracket. Only a mere 3 per cent of goods fall under the 28 per cent slab.
Modi’s “Diwali GST gift” announcement came a month ahead of the Bihar elections and mere weeks before the convening of the 56th GST Council meeting.
