GST tax slab: The meeting of the GST Council is going to be held next month. This meeting is going to be very special because changes in the rules related to GST can be announced in it. Actually, a proposal to abolish the tax slab of five percent is being considered, which can be discussed in the GST meeting. According to the report of news agency PTI, high consumption products can be put in the slab of 3 percent and the rest in the slab of 8 percent. This will help the government to generate revenue and other states will not have to depend on the Center for compensation.
Presently GST is a four tier structure
Explain that at present, GST is a four-tier structure, which is taxed at the rate of 5%, 12%, 18% and 28% respectively. Essential goods are either exempted or taxed in the lowest slab, while luxury and demerit items are subject to the higher tax slab. Luxury and sin goods attract the highest cess above the 28 per cent slab. Tax collection on this is used to compensate the revenue loss to the states after the rollout of GST. In addition, gold and gold ornaments attract a tax of 3%. At the same time, unbranded and unpackaged food items and dairy items are out of the purview of GST. According to sources, to increase revenue, the council may keep some non-food items from the exemption list and keep the 3% slab.
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5% slab to be abolished
Sources said discussions are on to increase the 5% slab to 7 or 8 or 9%. However, the final spread will be taken by the GST Council which will include finance ministers from both the Center and the states.
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Revenue will increase by ₹ 1.50 lakh crore
The agency said increasing the tax slab from 5% to 8% could generate an additional ₹1.50 lakh crore annual revenue. According to calculations, a one per cent increase can generate revenue of Rs 50,000 crore annually. This mainly includes packaged foods. Further, the GoM wants to make GST a three-tier structure, with revision of rates of 8%, 18% and 28% respectively.