The removal of the 12 and 28 percent tax slabs from the GST system would result in lower prices for everything from ghee and butter to clothing and footwear.
There is a 12 percent tax on purchases of shirts, pants, and shoes that over Rs. 1000, while purchases under Rs. 1000 are subject to a 5 percent GST. All shirts, trousers, and shoes will now be subject to a 5% tax.
The removal of the 12 and 28 percent tax slabs from the GST system would result in lower prices for everything from ghee and butter to clothing and footwear.
There will now be a 7% tax cut.
The government’s latest plan is that 99 percent of the goods in the 12 percent slab would fall under the five percent tax bracket.
As a result, consumers will pay less for hundreds of everyday items that are now subject to taxes that are up to 7% lower than they were before.
Also Read: Gold Prices Likely to Stay Low Amid Jackson Hole and US-Russia Talks
Aluminum utensils, Ayurvedic and other medicines, candles, chutney, curtains, dry fruits, furniture, harvesting machines, jam, jelly, kitchenware, munitions, mosquito nets, nut-bolts, packed coconut water, packed juice, all varieties of packed namkeen.
pasta, pencils, shopping bags, silicon wafers, sports goods, synthetic threads, threshing machines, tooth powder, toiletries, 20-liter packed water bottles, items used in railroads, and jute and cotton handbags.
They are removing the 12% slab
Since the 18 percent slab accounts for 65 percent of the government’s income under the GST, analysts think the adjustment in tax rates would not have a significant impact on revenue. Only five percent of income is collected from the 12 percent slab, which is being abolished.
The GST rate will now be 5%
These goods will now only be subject to 5% GST rather than 12%. 11% of GST income comes from the 28% slab, while 18% goes to its goods. 28% includes very few goods. A 40% GST rate would apply to many of these items.
GST Collections Hit Record
Five percent of GST income goes to the 12 percent slab, which means that they get a nine thousand crore rupee portion of the 1.8 lakh crores.
According to Harpreet Singh, indirect tax partner at Deloitte, the revenue loss is being estimated to be around Rs 4 thousand crores per month in light of the government’s recent proposal.
The government may include a large number of items in the 28 percent to 40 percent range. Discussions are now taking place in this direction. The low cost of common items, according to Singh, would eventually lead to a rise in sales, which will offset the decline in GST revenue.
Reforms to the GST will raise Optional income
The GST structure reform is a really innovative move.
According to Najib Shah, the GST structure’s highlight, reduced compliance load, and simpler tax rates for small and medium-sized businesses are revolutionary measures. These will make the tax system stronger. It will promote growth and solidify India’s standing as a top location for foreign investment.