Keep 2, Eliminate 2. Rationale Behind Proposed New GST Rates Explained

Rationalisation of the GST framework - a process that began this morning with Finance Minister Nirmala Sitharaman chairing a GST Council meet - is based on sharp differences in revenue collected under each of the existing four slabs.

High hopes ride on the 56th GST Council meeting as it takes up proposals to simplify slabs and slash rates on key goods and services.

The next generation GST reforms would 'absolutely' set an economy open and transparent with further reduction in compliance burden and benefiting small businesses, Union Finance Minister Nirmala Sitharaman said on Tuesday.

The auto industry is expecting some major changes from the GST Council meeting, which is scheduled to begin on September 3.

The Goods, Services Tax Council, led by Finance Minister Nirmala Sitharaman, begins a two-day meet today eto discuss a shift to a two-slab system expected to slash prices of daily-use items by reducing the brackets under which most goods are taxed.

A tax panel has proposed steep increases in consumer levies on luxury electric cars priced above $46,000, a government document showed, a move that could impact sales of carmakers such as Tesla, Mercedes-Benz, BMW and BYD.

At present, GST on premium economy, business, and first-class tickets is uniformly 12 per cent, applicable across all flights.

Lowering GST for under-350cc will help broaden access, but raising GST for above-350cc would damage a segment vital to India's global edge," Lal said.

Opposition-ruled states on Friday said the Centre's proposal for GST rate reforms could result in a revenue loss of about Rs 1.5 crore to Rs 2 lakh crore and demanded compensation for the losses incurred by them.

BMI, a Fitch Solutions company, said India is likely to remain one of the fastest-growing emerging market economies in Asia through this decade.

PM Narendra Modi announced on August 15 to bring "next-generation" GST reforms that will reduce the tax burden across the country.

The high-powered GST Council, chaired by Finance Minister Nirmala Sitharaman, will meet on September 3-4 to discuss moving to a two-slab taxation.

The Centre's proposed reduction in GST is also expected to lead to a drop in costs for car buyers, reducing on-road prices as well as EMIs.

Proposed GST cuts on petrol and diesel vehicles could reduce EVs price advantage, slowing adoption while causing major revenue losses for the government - HSBC.