GST Council Meeting: GST Council meeting from today, know what can be the big decisions and what things will be discussed

GST Council: The country and the world are keeping a special eye on this meeting which is being held ahead of time. Because after PM Modi's announcement of GST reform, steps will be taken in that direction.

GST Council Meeting: The two-day meeting of the GST Council is going to be held from today i.e. Wednesday. The country and the world are keeping a special eye on this meeting which is being held ahead of time. Because after PM Modi's announcement of GST reform, steps will be taken in that direction. In this, ambitious changes in the Goods and Services Tax (GST) can be considered to reduce tax on daily use items.

A decision on GST reform will be taken during this GST Council meeting chaired by Union Finance Minister Nirmala Sitharaman. Among the proposed reforms, the main one is to remove the current tax slab of 12% and 28% and keep only two tax rates of 5% and 18%. Apart from this, some selected items will be taxed at a special rate of 40%.

Why GST Council is important

The reduction in tax slabs and consequent reduction in prices has generally been welcomed. But states ruled by opposition parties are demanding compensation for the loss of revenue due to this change.

Prime Minister Narendra Modi had talked about the plan of GST reforms in his Independence Day speech on August 15. Soon after this, the central government shared the blueprint of the proposed reform with the Group of Ministers (GoM) of various states for preliminary review.

The GoM has agreed to the Center's proposal to reduce tax rates. The council will consider these recommendations on September 3-4.

News agency PTI has quoted sources as saying that while broadly agreeing with the changes in the slabs, the Group of Ministers has supported imposing 18% GST on electric vehicles priced up to Rs 40 lakh. However, the central government wants to encourage electric vehicles and is supporting a 5% rate for them.

What can be the big changes

Items like ghee, dry fruits, 20 liters of drinking water, namkeen, some shoes and apparel, medicines and medical equipment are likely to be brought down from 12% to 5% tax slab.

Items like pencils, bicycles, umbrellas and hair pins can also be brought under the 5% slab.

Tax on electronic items like TVs, washing machines and refrigerators can be reduced from 28% to 18%.

The highest rate of 28% and compensation cess is currently applicable on vehicles. 18% rate will be applicable on entry level cars. At the same time, a special rate of 40% will be applicable on SUVs and luxury cars.

The special rate of 40% will also be applicable on demerit items like tobacco, pan masala and cigarettes. Additional tax can also be imposed on this category above this rate.

Opposition states like West Bengal have demanded that any tax imposed above the 40% rate should be shared with the states. So that their revenue loss can be compensated. The eight states ruled by opposition parties include Himachal Pradesh, Jharkhand, Karnataka, Kerala, Punjab, Tamil Nadu, Telangana and West Bengal.