GST Overhaul Proposed: TVs, ACs to Get Cheaper, Online Gaming Tax Soars
The Indian government is considering a major overhaul of the Goods and Services Tax (GST) system, moving from the current multi-tiered structure to a simplified two-slab model of 5% and 18%. This change could significantly impact household budgets and key industries.
Key Proposed Changes:
- Affordability Boost: “White goods” like televisions, air conditioners, refrigerators, and washing machines are set to become more affordable as their GST rate is proposed to drop from 28% to 18%.
- Essential Goods Stay Low: Essential items such as food, medicines, and daily-use goods will remain in the Nil or 5% tax bracket. Agricultural equipment is also proposed to drop from 12% to 5%.
- ‘Sin’ Tax Hike: Certain items, including online gaming, would be classified as ‘sin’ or demerit goods and face a high 40% GST rate.
- Streamlined Structure: The new system aims to move 99% of items currently in the 12% slab down to 5% and 90% of items from the 28% slab down to 18%. This would simplify the tax system for both businesses and consumers.
Beyond the Rates: Administrative Reforms
The proposal also includes significant administrative changes to improve efficiency and compliance:
- Faster Registration: A new tech-driven process could clear 95% of GST registration applications within three days.
- Automated Systems: Pre-filled GST returns and automated refunds for exporters are also on the table, which would reduce manual errors and speed up financial processes for businesses.
This proposal is currently being reviewed by three different groups of ministers and will then be presented to the GST Council for final approval. If adopted, it would be the biggest GST reform since its implementation in 2017.