GST overhaul: Panel clears shift to just 2 tax rates
A government panel has okayed a major GST revamp—moving to just two main tax rates, 5% and 18%, instead of the old 12% and 28%.
The idea is to make taxes less confusing and give the economy a little boost.
The GST Council will take a final call in September, with the government aiming for a rollout before Diwali (October 20, 2024).
States fear revenue loss, seek compensation
Most stuff that was taxed at 12% drops to 5%, and nearly all items under the steep 28% rate shift down to 18%.
Only luxury buys like fancy cars or tobacco get hit with a new high rate of 40%.
This shake-up could mean easier compliance for businesses and better prices for shoppers.
States are worried about losing revenue—some estimate up to ₹1.1 lakh crore per year—and want compensation from the Centre.
The plan tries to balance simpler taxes with making sure states don't lose out.