Will the 2-Day GST Council Meeting Transform Compliance for Small Businesses?
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Synopsis
Get ready as the GST Council convenes to discuss groundbreaking reforms that could reshape tax structures across India. Discover how proposed changes aim to lighten compliance burdens and provide much-needed support to small businesses while potentially lowering costs for everyday consumers.
Key Takeaways
- GST Council meeting focuses on tax reforms.
- Proposed two-slab tax structure aims to cut rates.
- Small businesses expected to benefit from reduced compliance burdens.
- Common food items may be included in the zero GST category.
- Implementation of changes could happen by September 22.
New Delhi, Sep 3 (NationPress) With the aim of initiating one of the most significant reforms in India, the GST Council is preparing to review a two-slab tax framework suggested by the Centre, aimed at slashing GST rates on more than 150 items as part of a thorough rate adjustment.
The two-day assembly, commencing Wednesday, is led by Finance Minister Nirmala Sitharaman along with state ministers. FM Sitharaman stated that the forthcoming GST reforms will foster an open and transparent economy, lessen compliance burdens, and support small enterprises.
The Council will deliberate on two tax tiers of 5% and 18% by transitioning products from the existing 12% and 28% brackets to these reduced rates.
A special 40% tax is anticipated to be imposed on select items.
The plans to transition various products from the 12% and 18% GST categories to the 5% rate or even to the zero GST bracket seek to alleviate the tax load for households and stimulate spending.
A crucial component of this initiative includes broadening the zero GST category to encompass commonly consumed food items such as loose paneer, khakhra, pizza bread, chapati, and roti, which are currently subjected to GST rates ranging from 5% to 18%, according to various reports.
Convenience foods like paratha and parotta, presently taxed at 18%, are also being considered for GST exemption. Other items such as butter, condensed milk, jams, nuts, namkeens, mushrooms, and dates may experience a tax rate reduction from 12% to 5%.
The Centre has suggested lowering the GST on various confectioneries, popular packaged snacks, breakfast foods, and dessert items from 18% to 5%. Items in this category reportedly include cocoa chocolates, pastries, ice cream, and breakfast cereals like cereal flakes, mainly consumed by urban residents and younger populations.
Additionally, there are expectations to reduce the tax on entry-level passenger vehicles and two-wheelers to 18%, making them more affordable ahead of Diwali. Currently, all combustion engine passenger vehicles are subjected to a GST of 28% plus a compensation cess ranging from 1% to 22%, depending on engine capacity, length, and body type.
The education sector is also poised for benefits, with proposals to lower the GST on items such as maps, globes, pencil sharpeners, exercise books, graph books, and lab notebooks from 12% to zero. This could result in significant cost savings for students and parents, especially before the new academic year begins.
Rate reductions will be presented to the GST Council, which consists of representatives from both Central and State governments. The revised GST structure could be enacted by September 22, pending approval.
Point of View
I believe this GST Council meeting is crucial for enhancing economic transparency and supporting small businesses. The proposed reforms not only aim to ease compliance burdens but also enhance consumer spending power. It is imperative that these discussions lead to a balanced approach that benefits both businesses and consumers alike.
NationPress
03/09/2025
Frequently Asked Questions
What are the proposed GST rate changes?
The GST Council is proposing to reduce rates on various items, transitioning products from 12% and 28% to 5% and 18%. Additionally, some items may be moved to the zero GST category.
How will these changes impact small businesses?
The reforms are designed to lessen compliance burdens for small businesses, potentially leading to increased profitability and growth opportunities.
When will the revised GST structure be implemented?
The new GST structure may be implemented by September 22, pending approval from the GST Council.
Which consumer items will see tax reductions?
Common food items, confectioneries, and educational supplies may see significant tax reductions, making them more affordable for consumers.
How does this reform affect the education sector?
Items crucial for education like maps, globes, and notebooks may have their GST reduced from 12% to zero, benefiting students and parents financially.
