A Revamped Two-Slab GST Could End Bizarre Disputes

The rejig will also help the auto sector, with small cars attracting an 18% levy, from 28% now

- Gireesh Chandra Prasad

Businesses will be spared courtroom drama around product tax rates, as revamping the goods and services tax (GST) into a mainly two-rate structure will prevent quirky disputes such as those over parathas and popcorns, a result of the descriptive classification in the existing tax system, government officials said.

The rejig will also benefit the automobile sector. Cars with smaller engines will likely shift from the current 28% slab to 18%, while higher-end models will move to a 40% slab, but still face a lower overall tax burden once the compensation cess, ranging from 17% to 22% on automobiles, is phased out.

The GST Council's group of ministers on tax rate rationalization, led by Bihar deputy chief minister Samrat Chaudhary will meet in New Delhi on Wednesday and Thursday to examine the central government's proposal for an overhaul of the GST framework.

"The agenda is exhaustive," said one of the officials cited earlier, all of whom spoke on the condition of anonymity.