An image showing coins and the word GST. For representational purposes.
Credit: iStock Photo
India is looking forward to revamp its tax scenario with GST 2.0. The Modi government at the Centre has proposed a two-tier GST structure of 5 and 18 per cent for the country.
It is said to be India's biggest tax reform in the past eight years, aiming at the reduction of consumption levies on certain goods, such as daily goods and small cars.
However, these aren't the only two areas will are likely to benefit from the tax reforms.
Here's what will likely become cheaper under new GST structure
Small cars
Everyday items like personal care products
Air conditioners
Television
Insurance premiums
More details
The revamp is widely being referred as "Diwali Bonanza" as the revised rates may be rolled out around September or October. "This Diwali, I am going to make it a double Diwali for you," Modi said during his I-Day speech.
As of now, the sale of goods and rendering of services are taxed in four different brackets -- 5, 12, 18 and 28 per cent -- with luxury and sin goods attracting a levy on top of the highest rate of 28 per cent.
The tax cut is spread across items with consumer, auto and insurance companies likely to emerge as the biggest winners when product prices drop following the reform's approval, the Reuters reported.
The news agency further stated that the government has suggested lowering GST on small petrol and diesel cars to 18 per cent from the current 28 per cent, said the source who is directly involved in the matter. The consumption tax on health and life insurance premiums may also be lowered to 5 per cent or even zero from 18 per cent currently.
Congress leader Jairam Ramesh reacted to the proposed reforms and suggested that sectoral issues in textiles, tourism, exporters, handicrafts and agricultural inputs must be tackled. In addition, states should be incentivised to move towards the introduction of state-level GST to cover electricity, alcohol, petroleum, and real estate as well, he opined.