The rationalisation of GST rates is under preliminary assessment to address imbalances and avoid the inverted duty structure where the final product’s tax is lower than that on inputs. Although the industry has called for rationalisation, involving reworking rates and merging the four slabs into three, the government plans to proceed cautiously with a detailed analysis.
GST (Goods and Services Tax) is a unified indirect tax levied on goods and services across India, replacing multiple cascading taxes levied by the central and state governments.
GST has four primary tax slabs: 5%, 12%, 18%, and 28%. Essential items may attract a lower rate, while luxury items and sin goods are taxed at higher rates.
GST is a dual structure comprising CGST (Central GST) levied by the central government and SGST (State GST) by state governments on intra-state transactions. IGST (Integrated GST) is levied on inter-state transactions.
Businesses can claim input tax credit for taxes paid on inputs used in the production or provision of goods and services, thus eliminating tax cascading.
Chaired by the Union Finance Minister, the GST Council includes state finance ministers. It is responsible for making recommendations on tax rates, exemptions, and amendments.
Some items, such as essential commodities like fresh food and healthcare services, are exempted from GST to protect consumers and maintain affordability.
GST is managed through an online portal (GSTN), facilitating registration, return filing, payment, and compliance for taxpayers.
GST aims to streamline tax administration, reduce tax evasion, promote ease of doing business, and create a unified national market.
Since its implementation on July 1, 2017, GST has undergone several amendments and rate revisions based on feedback and economic conditions.
Challenges include compliance issues for small businesses, initial adjustment periods, and periodic reviews for rationalising rates to balance revenue and economic impact.
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