New Delhi, Aug 15 Industry experts on Friday lauded Prime Minister Narendra Modi's Independence Day announcements on bringing next-generation reforms in Goods and Services Tax (GST) regime which would be unveiled by Diwali.
The move will provide "substantial" tax relief to the common man and benefit small businesses, said industry leaders, adding that the reforms will also prove to be beneficial for MSMEs and large-scale producers.
"GST rate structure rationalisation has been on the cards for a while now. With the announcement from the Prime Minister, it seems the rate fitment work is complete and one could expect the rate rejig of items of daily consumption falling in 12 per cent to 5 per cent which could help not reduce end product prices but also boost consumption and demand especially for MSMEs," said Krishan Arora, Partner-Tax Planning and Optimisation, Grant Thornton Bharat.
Sudhir Kapadia, senior advisor at EY, said that GST reforms are a much-needed measure, and the charge coming directly from the Prime Minister gives a clear signal that there is not only an intent but a set timeline before Diwali. "It is about time that these reforms are undertaken", he added.
Following the announcement made by PM Modi, the Finance Ministry has also put forth the proposal about a simplified, two-tier Goods and Services Tax (GST) system with a "standard" and "merit" slab, alongside special rates for select goods.
The Group of Ministers (GoM), established by the GST Council to look into this matter, has received the government's proposal on rationalising and reforming the GST rate.
The rationalisation of tax rates to benefit all societal segments, particularly the average person, women, students, middle class, and farmers, is one of the main areas designated for next-generation reforms.
Abhishek Jain, Partner and National Head, Indirect Tax, KPMG in India, said that the government’s intent to move towards a two-rate GST (and a demerit rate on select goods), coupled with streamlined input tax credit refunds (both on inverted duty and exports), "is clearly a move in the right direction to make the system more efficient and less litigious. It balances simplicity with fiscal prudence, signalling a maturing GST regime."
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