The central government is going to make major changes in GST (Goods and Services Tax). The government has made a new plan called GST 2.0, which will soon be kept in the meeting of the finance ministers of the states. After this change, the current four tax slabs, 5%, 12%, 18% and 28% will be reduced to only two slabs and 18%. Meaning, earlier things that were levied 5% or 12% tax, they will now come into 5% slab. At the same time, those who had 28% tax will now come in 18% slab. This change will benefit the common people because the goods will be cheaper and their shopping will increase. This will also speed up the market and the economy will be strengthened. Government bank SBI has also stated in a report that this change can increase the total consumption of about Rs 1.98 lakh crore in the country.
What is mentioned in the report?
In the latest report of SBI Research, it has been told that these changes can be put in the revenue loss of about Rs 85,000 crore to the government. But despite this loss, the consumption of the country is going to be a boost of up to Rs 1.98 lakh crore. This means that demand in the market will increase and this will strengthen the country’s economy.
According to the report, there is a possibility of bringing GST from 12 per cent to 5 per cent from everyday things such as eating and drinking items and clothing. This can reduce the Consumer Price Index (CPI) based inflation rate from 0.2 to 0.5 percent. This simply means that your everyday things will be cheaper and inflation will feel less in the market. Especially the common man will benefit the most from the fall in prices of food and drink items.
This is why the rule of GST is being changed
So far, four tax slabs in GST are 5%, 12%, 18% and 28%, which are levied on different things and services. This has made the tax system a little complicated and makes it difficult for people to understand it. The aim of the government is to make tax rates easier and easy to understand, so that it is better to collect tax and people make more shopping. According to the SBI report, the average rate of GST may come down to about 9.5% after these reforms, while it is about 11.6%.
Economy will benefit
Due to this change, the government may have to incur a loss of about 45 thousand crore rupees this year. But due to tax cuts and relief in income tax, the total consumption of the country can increase up to Rs 5.31 lakh crore. This is about 1.6 percent of India’s total GDP. It is clear that even though the government will suffer some loss, it will bring new life to the economy and the market will be strong.
40% tax on harmful goods
The government has also paid special attention to harmful items like pan masala, tobacco. Under GST 2.0, there is a plan to increase the tax rate on these things to about 40 percent. Its purpose is not only to increase revenue, but also reduce the consumption of these harmful products. The government says that this heavy tax is being imposed so that their use can be controlled and the government can also get additional revenue. This step is also considered to be important in terms of public health.