GST and Income-Tax System Overhaul
The central government has proposed a comprehensive overhaul of the tax system, focusing on both direct and indirect taxes. This involves a structural revamp of the Goods and Services Tax (GST) and recent changes in the Income-Tax Bill passed by Parliament.
Proposed GST Reforms
- A new two-tier GST system with slabs of 5% and 18% is proposed.
- An additional 40% slab will apply to certain sin goods.
- The compensation cess will be removed in line with rationalized rates.
- Improved input tax credit systems and strengthened GST tribunals are planned.
- Elimination of the 12% and 28% GST slabs, pending state approval.
Sector-Specific GST Rate Changes
- Proposed reduction of GST on cement and most automobiles from 28% to 18%.
- Potential short-term revenue loss is estimated at ₹33,000 crore.
- Implementation is aimed for by the first week of October.
Implications for Cement and Automobile Sectors
- Lower GST on cement is expected to reduce construction costs and boost affordability.
- The automobile sector, especially smaller cars, will see a reduced tax burden, though luxury vehicles may continue with higher taxes.
