SYLLABUS SECTION: GS III (ECONOMY)
WHY IN THE NEWS?
The Goods and Services Tax (GST) Council has decided to hike and lower GST Hikes on certain commodities.
GST :
- It was launch on 1 July 2017, is a comprehensive indirect tax for the entire country.
- It is charged at the time of supply and depends on the destination of consumption.
- GST, being a consumption-based tax, resulted in loss of revenue for manufacturing-heavy states.
GST Slabs:
- There are 4 major GST slabs rates, 5%, 12%, 18% and 28%, plus a cess levied over and above the 28% on some ‘sin’ goods.
- The GST Council periodically revises the items under each slab rate to adjust them according to industry demands and market trends.
- The updated structure ensures that the essential items fall under lower tax brackets, while luxury products and services entail higher GST Hikes rates.
- The 28% rate is levied on demerit goods such as tobacco products, automobiles, and aerated drinks, along with an additional GST compensation cess.
Why rationalize GST slabs?
- There are far too many rates and do not necessarily constitute a Good and Simple Tax.
- Multiple rate changes since the introduction of the GST regime in July 2017 have brought the effective GST rate to 11.6% from the original revenue-neutral rate of 15.5%.
- Merging the 12% and 18% GST rates into any tax rate lower than 18% may result in revenue loss.
Read more:Â UPSC CURRENT AFFAIRS
SOURCE: FINANCIAL EXPRESS