Preparations are being made for massive changes in the GST system. At present there are four tax slabs of GST namely 5%, 12%, 18% and 28%. These can be reduced and converted into three tax slabs. Apart from this, some items can be excluded from the purview of exemption.
new Delhi. There may be a change in the Goods and Services Tax (GST) system to increase the income of the states and simplify the rates. Since the GST regime that came into effect from 2017, the Central Government is compensating the states for the loss in tax revenue. The period of GST compensation will expire in June this year.
Government sources say that the central government will implement the GST changes gradually and not all at once. The purpose of doing this is to reduce the impact of these changes on the consumption of the goods. The Group of Ministers headed by Karnataka Chief Minister Basavaraj Bombay is going to meet soon to finalize the recommendations related to these changes.
Tax slabs will be reduced
According to a media report, by changing the GST, three slabs will be made instead of the existing four slabs. Apart from this, anomalies related to deduction in tax exemption and tax on raw materials and intermediates can be removed. The discussion about reducing the GST tax slab is going on for a long time.
Increase in taxes for the textile industry
There is every possibility of an increase in the tax rate of the textile industry. By doing this an attempt will be made to remove the shortcomings of the inverted duty structure. Earlier, in the meeting of the GST Council held on December 31, the decision to increase the GST rate from 5 percent to 12 percent on many items of the textile and apparel industry was postponed.
GST compensation ends from July 1
On July 1, on the completion of five years of the current GST system, the compensation given to the states will end. After the implementation of GST, the Central Government is giving this compensation to the states to compensate for the loss of tax revenue. With the end of GST compensation, there will be an impact on the budget of the states. Its impact will be more on big states. That is why states will have to find new ways to increase revenue by removing tax exemptions on various items and reducing the number of slabs.
