GST Slab Rate: The central government has proposed only two tax rates of 5% and 18% in the revised system of Goods and Services Tax (GST), which is expected to be implemented by Diwali.
GST Slab Rate: There is a preparation for a big change in the GST slab structure. The central government has proposed only two tax rates of 5% and 18% in the revised system of Goods and Services Tax (GST), which is expected to be implemented by Diwali. At the same time, in the revised GST system, apart from two tax slabs, a special rate of 40% has been proposed for luxury and sin goods.
These two tax rates will be removed
The central government has sent this proposal to the group of finance ministers of the states formed to rationalize the GST rates. In this, the existing tax rates of 12 and 28% have been removed.
PM Modi announces reduction in GST rates
Prime Minister Narendra Modi, during his address on the 79th Independence Day, announced a significant reduction in GST rates by Diwali, saying that this will provide relief to the common people and small and medium industries.
99% of the items included in the 12% tax slab will come under the 5% tax slab
After the approval of this proposal in the meeting of the GST Council, the highest body that takes decisions on GST related matters, 99% of the items included in the current 12% tax slab will come under the 5% tax slab.
Similarly, about 90% of the goods and services currently falling under the 28% tax bracket will be shifted to 18% tax rates under the new system.
Now 40% GST on tobacco products
Sources said that the special rate of 40% tax will be imposed on only 7 items. Tobacco products will also be kept under this rate but the total taxation rate will remain at the current 88% tax.
40% tax on online gaming
Considering online gaming as a loss-making product, it is proposed to keep it under the purview of 40% tax. GST on online gaming can be increased from 28 to 40%.
These 8 sectors will benefit the most
According to the Centre’s proposal, 8 sectors – textiles, fertilizers, renewable energy, motor vehicles, handicrafts, agriculture, health and insurance – will benefit the most from the change in GST rate.
An official source said that the revised GST is expected to give a big boost to consumption and if this happens, the revenue loss due to rate revision will be compensated.
How much revenue from which slab
The current GST structure, implemented from July 1, 2017, merged central and state levies. The highest tax in GST comes from 18%. 67% of the revenue comes from 18%. 11% revenue comes from 28% category, 5% from 12% and 7% from 5%.
Provision of cess will be abolished
There will be no provision of cess in the proposed GST. Cess will not be imposed after the day the states repay their old loans. It is expected that cess may be abolished from October-November. There is a plan to impose 0 and 5% GST on insurance which is currently 18%. Cement can be brought under 18% GST.
It can be implemented from Q3
Expressing hope of its implementation at the beginning of the third quarter, he said, ‘Change in tax rates will make a difference in revenue but it will be compensated in the next few months.
Central and state taxes were merged in the current GST structure implemented from July 1, 2017. Under this indirect tax system, the maximum 65% tax collection is done from 18% tax. The highest tax rate of 28% applicable on luxury and sin goods contributes 11% to GST revenue, while the 12% tax rate contributes only 5% to the revenue.
Tax Slab (%) Contribution to GST Collection (%)
| 5% | 7% |
| 12% | 5% |
| 18% | 65% |
| 28% | 11% |
The lowest tax rate of 5% is levied on essential items of daily use, which contributes 7% to the total GST collection. High labour-intensive and export-oriented sectors like diamonds and precious stones will continue to be taxed at the current rates.
Under the GST Act, a maximum of 40% tax can be levied on any goods or services.
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