Government's Bold GST Reforms to Reshape Tax Landscape

The Central Government is preparing to embark on a substantial overhaul of the nation's Goods and Services Tax (GST) framework, a move aimed at simplifying the existing complex tax structure. As disclosed by government insiders on Friday, the proposed reforms intend to scrap the 12% and 28% tax slabs, consolidating most items under new 5% and 18% categories.

In what is being touted as a path-breaking initiative, an estimated 99% of items currently taxed at 12% are set to shift into the 5% bracket, while 90% from the 28% bracket will move to 18%. This switch is expected to lighten the financial load on consumers buying basic goods, while a new 40% slab will target 'sin goods' such as tobacco and pan masala.

Prime Minister Narendra Modi's announcement from the Red Fort suggests a national-scale tax reform intended as a major Diwali offering. With the proposal now in the hands of the GST Council's Group of Ministers, deliberations are anticipated in the upcoming months to finalize and potentially implement these reforms nationwide.

(With inputs from agencies.)