In a significant move aimed at easing financial pressures on middle-class and lower-income families, the Central Government of India is planning to restructure the Goods and Services Tax (GST). According to sources, the government is considering eliminating the 12% GST slab entirely or shifting many items currently taxed at this rate to the lower 5% bracket. This change could greatly benefit households as it focuses on essential goods commonly used in daily life.
Items that may see a reduction in GST rates include toothpaste, tooth powder, umbrellas, sewing machines, pressure cookers, kitchen utensils, electric irons, geysers, small washing machines, and bicycles. Other products like readymade clothes priced above ₹1,000 and footwear costing between ₹500 and ₹1,000 could also be affected. The aim is to make these essential items more affordable for the average consumer.
Currently, the 12% GST slab includes many goods that are necessary but not classified as absolute essentials, which are taxed at 0% or 5%. If the proposed changes are implemented, many of these items will become cheaper, providing relief to families struggling with rising costs.
Financially, the government is prepared for an initial revenue loss estimated between Rs 40,000 crore and Rs 50,000 crore. However, officials believe that this short-term loss will be offset by increased consumption, which could lead to greater tax revenue in the long run. Finance Minister Nirmala Sitharaman has suggested that the government is looking to create a more rational GST structure. She indicated that changes would focus on essential items, aiming to provide relief to the middle class.
Despite the government’s intentions, not all states are in agreement. The GST Council, which consists of representatives from each state, must approve any changes to tax rates. Currently, there is opposition from states like Punjab, Kerala, Madhya Pradesh, and West Bengal. The GST Council has only voted once in its history; all other decisions have been reached by consensus. The topic of GST restructuring is expected to be discussed in the upcoming 56th GST Council meeting, which may occur later this month.
This move comes at a critical time, as the country faces increasing inflation and living costs. By reducing the tax burden on essential goods, the government hopes to stimulate consumer demand and support the economy. The Centre sees this as a strategic step, particularly ahead of the festive season and the next Union Budget.
If the changes to the GST structure are approved, many households could see significant savings on their everyday expenditures. Items that currently fall under the 12% category include a wide range of products that families use regularly. By shifting these items to a lower tax rate, the government aims to provide much-needed financial relief to millions of consumers.
In summary, the proposed changes to the GST structure could bring about a major reduction in the tax burden for middle-class and lower-income households. With the government working towards a rationalised system, it remains to be seen how the GST Council will respond to this plan and what impact it will have on consumers across India.
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