Why in the News?
- The Group of Ministers (GoM) on Rate Rationalisation has accepted the Centre’s proposal to simplify GST into a two-rate structure.
- The recommendation will now be placed before the GST Council for final approval.
About Goods and Services Tax (GST):
- Nature: Comprehensive, multi-stage, destination-based indirect tax on goods and services.
- Introduction: Launched July 1, 2017, via the 101st Constitutional Amendment Act, 2016.
- Replaced Taxes: Subsumed excise duty, value-added tax (VAT), service tax, etc.
- Objectives: One Nation–One Tax, reduce cascading taxation, simplify compliance, expand tax base.
- Structure: Five slabs – 0%, 5%, 12%, 18%, 28%, with cess on luxury/sin goods (tobacco, cars, online gaming).
- Exemptions: Essential goods (food, medicines, education items) in 0% slab. Petroleum, alcohol, and electricity remain outside GST.
Proposed Two-Rate GST Structure:
- Reforms: Removal of 12% and 28% slabs; only 5% and 18% to remain.
- Reclassification: 99% of 12% items → 5% slab; 90% of 28% items → 18% slab.
- New Slab: 40% rate for demerit goods (tobacco, luxury cars, real-money gaming).
- Cess: Compensation cess on 28% items to end.
- Timeline: Implementation expected October 2025 (Diwali).
Policy Rationale & Concerns:
- Simplification: From four slabs to two, easing compliance and transparency.
- Consumption Boost: Lower rates on daily goods to benefit households and Micro, Small and Medium Enterprises (MSMEs).
- Compliance Gains: Less scope for disputes, litigation, and evasion.
- Economic Signal: Projects confidence in domestic consumption as growth driver.
- State Concerns: States, including Kerala, warn of revenue loss; call for compensation mechanism.
| [UPSC 2018] Consider the following items:
1. Cereal grains hulled 2. Chicken eggs cooked 3. Fish processed and canned 4. Newspapers containing advertising material Which of the above items is/are exempted under GST (Goods and Services Tax)? Options: (a) 1 only (b) 2 and 3 only (c) 1, 2 and 4 only *(d) 1, 2, 3 and 4 |
