GST Diwali Dhamaka: 2-slab tax model, rate tweaks on agenda at Sept 3-4 meeting

In August, GST collections surged 6.5 percent year-on-year to Rs 1.86 lakh crore.

Union Finance Minister Nirmala Sitharaman-led GST Council is set to convene its all-important two-day meeting in New Delhi from tomorrow. The Council will deliberate on the new tax model and tax tweaks ahead of the October deadline. The GST Council will finalise the new model with a two-tax slab structure. So far, the Centre has suggested that the new GST structure will be based on one slab of 0–5% and the second one between 12% and 18%.

GST Council’s ex-officio secretary Arvind Shrivastava had released a circular last month regarding the September 3–4 meet. As per the notice issued by the Revenue Secretary, a meeting of state and Centre officers regarding the same was also held on Tuesday.

The meeting comes two weeks after Prime Minister Narendra Modi announced the big GST bonanza in his Independence Day speech from the iconic Red Fort. Apart from finalising the two-slab model, there is also a suggestion to impose a steep 40 percent tax on sin or demerit goods.

Many believe that GST 2.0 will lead to solid consumption in both rural as well as urban economies. Political strategist Ayush Nambiar said, “India’s pre-GST tax regime was nothing short of a travelling circus, every state played ringmaster with its own rules, and every border felt like a new ticket counter. Confusion, not commerce, was the show.”

Calling the new round of discussions a precursor to a revolution, Nambiar said, “GST, for all its critics, was never about adding layers of complexity, but about unifying a fragmented nation into one market, one system, one vision. Of course, the performance still has rough edges, but the intent is clear and historic: to end the fiefdoms of taxation and create a single economic identity. In a country as vast and varied as India, that is not just reform, it is nothing less than a revolution.”

In August, GST collections surged 6.5 percent year-on-year to Rs 1.86 lakh crore.

With a solid GST growth projection rate of 7.5 percent, the government is confident about ushering in the new GST reforms. The focus this time around will be on consumers. The Centre insists that the benefits of the GST rate rejig should be passed on to consumers. Hence, there is buzz that popular products such as pencils, mobile phones, and even computers and cars may get cheaper.

However, there are some voices of dissent. Karnataka Chief Minister Siddaramaiah has claimed that the GST overhaul will lead to a loss of Rs 15,000 crore to states. He also wants the Centre to make up for the loss. Karnataka is not alone. Non-BJP states such as Tamil Nadu, Kerala, West Bengal, and Punjab have also voiced their concerns.

However, the Centre is likely to assure state governments with collection data over the years. Collections have surged from an average of about Rs 92,500 crore per month in FY18 to more than Rs 2 trillion so far this financial year.