GST 2.0 Broad Framework May Include In Budget, Experts Predicts
In the forthcoming interim Budget to be presented on February 1, Finance Minister Nirmala Sitharaman may advance a broad framework on the second-generation reforms in the GST, industry experts predict.
Though actual changes to the GST would require the approval of the GST Council, the reforms to be initiated by the Minister would provide a direction for the businesses.
Two key areas it likely to focus include the rationalisation of tax slabs and the inclusion of petroleum products under the GST ambit.
India currently incorporates four-tier tax slab structure – 5%, 12%, 18%, and 28%, and this prevailing structure may trimmed to three in the revision. There are chances that 12% slab be eliminated and its items be merged either into the 18% or 5% slabs. There are also buzz that 5% slab may be adjusted a higher rate of 8%.
In 2021, a Group of Ministers (GoM) led by Basavaraj Bommai, then Chief Minister Basavaraj Bommai proposed for the rationalisation of GST slabs and rates. The panel submitted its interim report in June 2022, and it demanded more time from the GST Council to suggest final recommendations on rates.
The panel, then reconstituted and it is currently chaired by Uttar Pradesh Finance Minister Suresh Khanna. The seven-member panel consisted finance ministers from Kerala, Karnataka, West Bengal, Rajasthan, Bihar, and Goa. They are now equipped with the task of suggesting rationalisation of GST slabs and rates.
Incorporating petroleum products into the GST framework remain to be controversial topic between the central government and states since taxes imposed on petroleum products generates significant revenue for the latter. Since such situation persists, the central government may propose inclusion of aviation turbine fuel (ATF) and natural gas under the GST ambit, as the possibility of states opposing these products is comparatively lower.
Meanwhile, the Confederation of Indian Industries (CII) has suggested for a three-tiered tax structure, involving a low rate for essentials, a standard rate for most goods, and a high rate for luxury and demerit goods. Besides, in its recommendation, CII stressed importance of including products like petroleum, electricity, and real estate under the GST framework.
(With inputs from Deccan Herald)
