Next-Generation GST Reforms: A Proposed Overhaul of Tax Slabs
UPSC Relevance
Prelims: Indian Economy (Taxation, Goods and Services Tax - GST, Fiscal Policy), Indian Polity & Governance (GST Council, Centre-State financial relations).
Mains:
GS Paper 3: Government Budgeting; Indian Economy and issues relating to mobilization of resources, growth, development and employment; Economic reforms.
GS Paper 2: Functions and responsibilities of the Union and the States, issues and challenges pertaining to the federal structure, devolution of powers and finances up to local levels and challenges therein (role of GST Council).
Key Highlights from the News
Main Proposal: The central government has proposed next-generation GST reforms, with the main point being the rationalization of tax slabs.
New Slab Structure:
Existing 5% and 18% slabs will be retained.
12% and 28% slabs will be removed.
A new concessional rate below 1% and a high "sin rate" of 40% for a few products will be introduced.
There is also a proposal to remove the existing GST cess.
Government's Objective:
The government believes that reducing tax rates will increase consumption, decrease tax evasion, and thus increase revenue in the long term.
Procedure:
This proposal will be examined by a Group of Ministers (GoM).
Afterwards, the GST Council will make a final decision after achieving consensus between the Centre and states.
Other Reforms:
Speeding up GST registration using technology.
Implementing pre-filled returns.
Providing refunds quickly and automatically.
The aim is to achieve "ease of living."
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