Centre moots two-rate GST system as part of PM Modi’s ‘Diwali gift’

For the people of India, Prime Minister Narendra Modi’s “Diwali gifts”, goods and service tax (GST) system will probably be ease in three columns-structural reforms, rate rationalization and life-and can change the GST system from the current five-day system.

“The government will bring the next generation GST reforms, which will reduce the tax burden on the common man,” Mr. Modi said during his speech at Red Fort in New Delhi on India’s 79th Independence Day. “This will be a Diwali gift for you.”

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The Finance Ministry in a press release said in detail on the announcement of the Prime Minister, the Central Government has sent its proposal to the group of ministers (GOMs) constituted by the GST Council to investigate the issue on GST rate rationality and reforms.

It states that the GST Council will be in its next meeting – for which the date is yet to be announced – consult the recommendations of GOM and will try to implement the bulk of reforms within this financial year.

The Finance Ministry said, “The major areas known for the next generation reforms include all sections of the society, especially the rationalization of tax rates to benefit the common men, women, students, middle class and farmers.”

“Improvement will also seek this to reduce the disputes related to classification, fix the inverted duty structures in specific areas, ensure higher rate stability, and to increase the ease of trade.” ,

One of the biggest changes of its announcement was “essentially 2 slabs – to move towards simple tax with standard and merit”. It states that ‘special rates’ will apply to “select some items only”.

The second major change is an attempt to reduce taxes on “Common-Man items and aspirational objects”.

The ministry said, “It will increase the ability, promote consumption, and make it more accessible to a broader population and more accessible items.”

To ‘Ease of Living’, the Center has proposed to use technology to speed up and make the GST registration process easier, implemented pre -filled returns, thus reducing manual intervention and eliminating mismatches, and processing refunds in a faster and more automatic way.

The Finance Ministry said, “In the true sense of cooperative federalism, the Center is committed to working closely with the states.” “It will build a wide-based consensus with the states in the coming weeks, conceived by Prime Minister Shri Narendra Modi to implement the next generation reforms.”

However, the release reduced the GST Council’s next meeting date. With the last meeting to be held in December 2024, the next meeting – is going to be held once in a quarter – a long time.

“The GST Council, when it meets the next time, will discuss the recommendations of the GOM, and every effort will be made to facilitate the initial implementation so that the benefits intended within the current financial year are felt to a large extent,” the release said.