GST 2.0: Paving the Way to 'One Nation, One Tax'
The report emphasizes the need for GST reforms by simplifying the tax structure to two slabs—5% and 18%. This change is expected to address anomalies, bolster compliance, and ultimately aim for a single tax rate. Moderation of taxes is portrayed not as revenue loss, but as a growth catalyst.
- Country:
- India
The long-term success of the Goods and Services Tax (GST) hinges on its evolution into a single nationwide tax rate. A recent report suggests that GST 2.0 should serve as a pivotal step towards this goal, advocating for just two tax slabs, set at 5% and 18%, with a peak rate capped firmly at 18% instead of 40%.
The report, 'GST 2.0: Two Slabs Today, One Rate Tomorrow', cautions against the introduction of a 40% slab for luxury goods, warning that it might expand over time to include more items, diluting the simplification efforts. The recommendation centers on pegging the peak indirect tax rate, including cesses, at 18%, aimed to eliminate inverted duty structures, cut down on grey markets, and reduce compliance burdens.
The GST Council, led by Finance Minister Nirmala Sitharaman, is set to convene to discuss these proposed reforms. The report underscores that moderation in taxes should be viewed as a strategic growth initiative rather than a revenue concession, with transparency and predictability in tax legislation as key tenets to restoring reliability in India's indirect tax system.
(With inputs from agencies.)
Google News