Govt seeks to revamp entire tax system with GST reform, I-T Bill

The central government's proposal for a structural overhaul of the goods and services tax (GST), along with the Income-Tax Bill recently passed by Parliament, will lead to a complete revamp of both the direct and indirect tax system in the country, said a senior government official.

- ASIT RANJAN MISHRA & MONIKA YADAV

"This is a complete revamp of the direct and indirect tax system. It will take the GST Council at least two meetings to go through all the item-wise changes in slabs. The inclusion of petrol and diesel under GST has been deferred for the time being in view of the prevailing energy sector uncertainties. It may be taken up in the next round of GST reforms," the official said, requesting anonymity.

The Centre has proposed a two-tier GST with 5 per cent and 18 per cent slabs, along with a 40 per cent slab for a few items in the sin goods category. The removal of the compensation cess will coincide with the rationalised and reduced rates. Further simplification of the input tax credit system will be undertaken as part of this round of GST reform. Capacity building by way of strengthening GST tribunals is also in the works.

If endorsed by all states, the proposal — being examined by the Group of Ministers (GoM) for rate rationalisation headed by Bihar Deputy Chief Minister Samrat Choudhary — will lead to the abolition of the existing 12 per cent and 28 per cent slabs in the GST.