Why in the news?
- The Central Government has proposed reducing the number of slabs under the Goods and Services Tax system.
Existing GST Regime:
- Goods and Services Tax is a form of Indirect Tax levied on most of the goods and services sold in India for domestic consumption.
- GST was introduced in India to avoid the cascading effect of taxes.
- It is a multistage, value added tax, which is also a destination based tax.
- In the existing regime, GST had five tax slabs – 0%, 5%, 12%, 18% and 28%.
Proposed GST Regime:
- These reforms would be part of a “Deepavali gift” from the Centre in the form of the “next-generation GST reforms”
- Retains 5% and 18% tax slabs and slashes the 12% and 18% tax slabs.
- Among the goods and services taxed under 12% slab, 99% of them are to be moved to the 5% tax slab.
- Among the goods and services taxed under 28% tax slab, 90% of them are to be shifted to 18% tax slab.
- Five among the seven sin goods categorised currently are to be taxed at 40%.
- There will be no additional Cess over the GST charged.