Paper: GS – III, Subject: Indian Economy, Topic: Economic Reforms, Issue: The Goods and Services Tax Reforms (GST Reforms) .
Context:
To push forward GST reforms, Union Home Minister Amit Shah will begin discussions with states and central ministries to build consensus on contentious issues, including the proposed removal of the 12% GST slab.
Key Takeaways:
| The Goods and Services Tax (GST): GST Council was established under the 101st Constitutional Amendment Act, 2016. The GST Council is a constitutional body responsible for addressing GST-related issues and providing recommendations to both the Union and State governments on matters of taxation. It also plays a crucial role in shaping the GST framework and ensuring its effective implementation across the country. The GST Council is a pivotal constitutional body tasked with overseeing the implementation and administration of the GST in India. Formed under the 101st Constitutional Amendment through Article 279A, the GST Council plays a critical role in creating a harmonized tax structure and fostering a unified national market for goods and services. |
Key Issues and Challenges in GST Rate Rationalisation:
The GST regime, after eight years of implementation, is undergoing a review to streamline its structure and address existing complexities.
- A primary focus of this review is the rationalisation of GST rates, with the proposal to eliminate the 12% slab being a major point of discussion.
- Proposal to Eliminate the 12% Slab
- The proposal involves merging the 12% GST slab with the existing 5% and 18% slabs.
- This would entail shifting some items currently taxed at 12% to the lower 5% slab and others to the higher 18% slab.
GST Reforms: Home Minister initiates talks for Rate Rationalisation Consensus:
Conclusion:
- The GST rate rationalisation process is a complex and challenging undertaking. It requires careful consideration of various factors, including revenue implications, economic impact, and administrative feasibility.
- Union Home Minister Amit Shah’s involvement in the process is expected to provide the necessary impetus for building consensus among all stakeholders and achieving a mutually agreeable solution that benefits both the Central government and the states.
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