India set for big reform push

New Delhi: Finance Minister Nirmala Sitharaman on Wednesday presented to Group of Ministers (GoMs) from States her government’s plans for sweeping reforms in the GST regime that involves slashing tax rates and easing compliance burden for businesses.

The GoMs on rate rationalisation, insurance taxation and Compensation Cess will over two days deliberate on the Centre’s ‘next-gen’ GST reforms under which tax will be levied at 5 and 18 per cent rates. A special 40 per cent rate has been proposed on 5-7 items, including sin goods. GST is currently levied at 5, 12, 18 and 28 per cent.

FM Nirmala Sitharaman tells the GoM that next generation GST reforms aimed at making India Aatmanirbhar and also the Centre committed to building broad-based consensus with States on next-gen GST reforms.

While food and essential items are either at nil or 5 per cent rate, luxury and demerit goods are in 28 per cent slab, with a cess on top of it. The finance minister’s address to the GoMs was for about 20 minutes during which she elaborated on the Centre’s proposal, a source said. She explained the necessity for GST reforms to the states, the source added. The group of ministers (GoM) on compensation cess was set up to decide on the future of compensation cess post the loan repayment period. Besides, the GoM on insurance was deliberating on reducing tax rates on health and life insurance premium.

The rate rationalisation GoM was mandated to suggest changes in slabs and rates and also remove duty inversion faced by certain sectors.