The tax revamp moves 99% of the goods in 12% GST slab to 5% and 90% of the items in the 28% slab to 18%, which will leave more disposable income with consumers, the minister said at a programme on Next Gen GST Reforms in Visakhapatnam. People, she said, “will have cash in hand”.
The new tax regime features only two slabs, 5% and 18%, aiming to simplify the tax structure and boost consumption. The new rates will be effective September 22.
The government claims that this rate rationalisation will make many everyday items cheaper. All dairy items, packaged foods, household goods, toiletries, consumer appliances, two-wheelers and cars will see a tax cut, directly benefiting the wallet of the common man.
Rate cut on consumer durables like AC, TV and car is expected to boost the demand from aspirational Indian consumers.
The GST Council approved the new rates at a meeting earlier this month. The government on Wednesday notified the revised rates for goods.”As rate notifications are now being released, it is imperative for industries to align their ERP systems, pricing decisions and supply chain,” said Saurabh Agarwal, partner, EY.”This strategic alignment is critical to ensure a smooth implementation and, crucially, to guarantee that the benefits of this rate rationalisation are effectively passed on to the end consumer,” he added.
Meanwhile, the Centre is actively monitoring prices to ensure industry passes on the tax benefits to the common man. Last week, tax officials held a series of meetings with industry players and asked field formations to check prices of more than 50 commonly consumed products to make sure industry is not holding onto the gains.
The government has already issued detailed frequently asked questions (FAQs) and clarifications to ensure that the transition is smooth.
(With inputs from PTI)
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