The central government is preparing for a major change in the Goods and Services Tax (GST). The Group of Ministers (GOM) formed in this direction may submit its recommendations soon. According to sources, the GOM may propose to remove the 12 percent and 18 percent tax slabs. If this happens, there will be a major change in the tax rates on many items.
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Tax on agricultural inputs will be cheaper
The government aims to simplify the GST rate structure and promote growth. In this episode, the agriculture sector can be given a big relief. Currently, 18 percent GST is applicable on fertilizer acids and 12 percent GST on bio-pesticides. According to the proposal, the tax on both can be reduced to 5 percent. This will provide significant relief to farmers and reduce agricultural costs.
Renewable energy will get a boost
The government may propose a reduction in GST rates on solar and other renewable energy products to promote green energy. Currently, solar water heaters, solar cookers, and their related parts are taxed at 12 percent, which is planned to be reduced to 5 percent. At the same time, GST on coal, briquettes, and solid fuels can be increased from 5 percent to 18 percent so that the impact of the reduction on revenue is balanced.
Relief to the textile and apparel industry
The textile sector is also expected to benefit from the GST changes. Currently, there is a 12 percent GST on synthetic filament yarn, staple fiber yarn, rubber thread, and carpets, which is proposed to be reduced to 5 percent. Apart from this, there can be a big change in the apparel sector as well. Currently, clothes up to Rs 1,000 are taxed at 5 percent. This limit can be increased to Rs 2,500. At the same time, the GST rate on apparel above Rs 2,500 can be increased from 12 to 18 percent.
The possibility of new rates being implemented on footwear
The government is also preparing to implement new rates on shoes and slippers. Currently, there is a 12 percent tax on footwear up to Rs 2,500, which can be reduced to 5 percent. But, GST on footwear costing more than Rs 2,500 can be increased from 12 percent to 18 percent.
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Important meeting of the GST Council
The final decision on all these proposals will be taken in the GST Council meeting to be held in Delhi on 3 and 4 September. It is believed that the central government can notify these changes by the end of September. If these reforms are implemented, the structure of GST will be simplified and will have a positive impact on the economy.