The GST Council, chaired by Union Finance Minister Nirmala Sitharaman and made up of ministers from all states, is expected to approve a two-rate GST structure with tax rates of 5% and 18%. Rate rationalization benefits healthcare, small businesses, textiles, pharmaceuticals, and insurance. However, a 40% tax has been imposed on sin goods such as tobacco, cigarettes, and alcohol, as well as luxury items.
According to sources, the GST Council has reached an agreement on rate rationalization.
Key Highlights
- GoM approves GST simplification to just 5% and 18% slabs, eliminating 12% and 28% rates.
- Reforms include automated refunds and pre-filled returns, aimed at reducing compliance burdens for businesses.
The Council is also expected to approve measures to reduce the registration time for non-risky MSMEs and start-ups from the current 30 days to three. The risk classification will be based on GSTN parameters and data analysis, which serves as the IT backbone for the indirect tax regime's implementation.
The Council's ongoing 56th meeting is also expected to approve an optional simplified registration scheme with automatic approvals for businesses with monthly tax liabilities of less than Rs 2.5 lakh.
According to reports, it is also likely that the proposal to issue export refunds within seven days was approved based on risk analysis. Refunds stuck in the inverted duty structure in sectors such as textiles, pharmaceuticals, chemicals, and fertilizers will also be released provisionally within seven days.
Small refunds of up to Rs 1,000 will be processed through ICEGATE to expedite export refund claims. Nearly 1.5 lakh pending shipping bills are expected to be cleared.
Also Read: GST Council Panel Clears Proposal to Abolish 12% and 28% Tax Slabs
The 56th GST Council Meeting
The two-day GST Council meeting began on Wednesday to discuss the long-awaited rate rationalization, GST slab restructuring into two rates, and the compensation cess.
The Council planned to reduce rates on a wide range of items from 28% to 18% and 12% to 5%. However, Sitharaman will announce the GST Council's final decision tomorrow, Thursday, September 4.
