A major change has been made in the GST rates in the country. The Group of Ministers (GoM) on GST rates, headed by Bihar Deputy Chief Minister Samrat Chaudhary, has approved the Centre’s proposal.
Under this, the existing four slabs will be abolished and now only two slabs will remain, 5% and 18%. Under these changes, the price of many items will also be affected.
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Now only two slabs 5% and 18%
In the new system, 5% tax will be levied on essential goods and services, while 18% tax will be applicable on other general category goods and services. In addition, 40% tax will continue to be levied on harmful and luxury goods like alcohol, tobacco, drugs, gambling, soft drinks and online gaming. The government believes that this will simplify the tax system, reduce tax evasion and make things cheaper for the common man.
Relief to the common man
About 99% of the goods that are currently in the 12% GST slab will be brought into the 5% slab. Most of the goods in the 28% slab will be shifted to the 18% slab. This will directly impact the pockets of the common man, farmers, middle class and small businessmen and many things may become cheaper than before.
What will be the impact on water parks and entertainment tickets?
The GST Council had already reduced the tax on the entertainment industry. On 25 January 2018, the government reduced the GST on entry fees to amusement parks like theme parks, water parks, joy rides, merry go round, go karting and ballet from 28% to 18%. After the new tax regime comes in, these services will currently attract 28% GST. However, now there will be only two slabs, 5% and 18%, so it is expected that in future the government may also bring activities like amusement parks into the 5% slab.
The new system will be implemented by Diwali.
Prime Minister Narendra Modi had said in his Independence Day speech on 15 August 2025 that the GST reforms will be implemented by Diwali 2025. That is, the new system can be implemented by October-November 2025. The government hopes that reducing the slabs will increase consumption and also replenish tax revenue.
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