GST regime may undergo 2 major reforms this year

GST regime may undergo 2 major reforms this year

The Goods and Services Tax (GST) regime is expected to see two major reforms in its fourth year--rationalisation of tax rates based on prudence rather than political considerations, and further easing of compliance--people aware of the matter said.

The people said three-slab GST rates instead of four could be considered--8%, 18%, and 28% in place of current slabs of 5%, 12%, 18%, and 28%. They said the GST Council is also considering correcting duty distortions for sectors like textile, furniture, and fertiliser, where taxes on inputs are more than the finished goods.

“Both the reduction in tax slabs and correction of inverted duty structure would lead to both increase and decrease in tax rates of some items. As the economy is still recovering from nationwide lockdown due to the coronavirus pandemic, the council may take a decision on rate rationalisation at an appropriate time so that both businesses and consumers would not be adversely affected. But ease of compliance is an ongoing process and it would continue,” one of the persons said on condition of anonymity.