GST 2.0: A New Approach to Taxation

• The GST Council has proposed a two-slab structure of 5% and 18% for indirect tax regime, with a special de-merit rate of 40% for sin and luxury goods.

• The move aims to reduce tax system complexity, shrink discretion spaces, and address classification issues.

• Lowering tax rates will make goods and services more affordable, boosting demand.

• The Council recommends the new rates will be effective from September 22.

• The tax rates have been reduced across a variety of goods and services, including daily consumption items, white goods, cars, and two-wheelers.

• The rate rationalisation exercise has also addressed contentious items like insurance and cement, with cement now taxed at 18% and life and health insurance policies exempt.

• The Council has simplified the registration scheme for small firms to ease compliance burden.

• The reduction in tax rates will impact the revenue stream for both the Centre and states, with an estimated net revenue implication of around Rs 48,000 crore.

Modern Taxation Framework is important topic for Civil service exam (WBCS).

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