GST Council made sweeping changes in rates. It removed GST rate of 12% and 28% and reduced the slabs from 5 to practically 3 i.e. 0%, 5% and 18%.
The recommendations provided in the 56th GST council meeting are summarized below:
•GST Rate structure: Four rate structure
is now simplified into two main rates: 5% (merit
rate) and 18% (standard
rate); with select luxury/sin goods/services, having special demerit rate of 40%.
•Populous Changes:, simplify rate structure, enable
widening of insurance and health coverage and support farmers & MSME’s
through reduced rates, stimulating higher demand
•Boost Make in India: reduce tax on medical devices, packaged
foods, air-conditioners, TV’s, passenger cars, ready made garments, hand-craft
and leather goods, man-made fibers, etc.
•Target Affordability: Reduce rate of tax on essentials,
bi-cycles, 3 wheelers, consumer goods, wellness/ personal care, affordable
hotels, basic house-hold goods and many life-saving medicines
•Policy Thrust: Incentivizing renewables, reduce tax on
fertilizers, ease in compliance, faster refunds for exporters, ease in
registration for MSME’s and provided necessary thrust for GDP growth
•Reformative: Reduce compliance burden and litigation
by removing classification disputes based on differential rates, clarify on
post-sale discounts, rationalize tax on ‘intermediaries’ and enable ease of
doing business
