New Delhi, Sep 3 Economists on Wednesday said that the ongoing 56th meeting of the Goods and Services Tax (GST) Council, chaired by Finance Minister Nirmala Sitharaman, could pave the way for a major tax reform that will directly benefit consumers.
They say that any revision in the GST slabs will make goods cheaper and give a strong push to demand in the economy.
Economist Rajeev Sahu told IANS that the two-day council meeting is particularly crucial as it is expected to bring changes to the four-tier GST slab structure introduced in 2017.
“This will be a big reform, one that Prime Minister Narendra Modi had hinted at during his Independence Day speech from the Red Fort,” he said.
Currently, the GST regime has four slabs -- 5 per cent, 12 per cent, 18 per cent and 28 per cent.
According to Sahu, the proposal under discussion includes merging the 28 per cent slab into the 18 per cent slab and bringing the 12 per cent slab down to 5 per cent. This, he noted, would make most products significantly cheaper.
Economist Surya Narayanan echoed the view, saying that prices of goods, particularly fast-moving consumer goods (FMCG), could fall by at least 15 per cent.
“When goods become cheaper, demand will rise. Increased consumption will boost GDP growth. This is not just about tax restructuring or price reduction, it is also about simplifying return filing and compliance,” he explained.
Manoranjan Sharma, Chief Economist at Infomerics Ratings, said the new framework would leave only the 5 per cent and 12 per cent slabs, which would directly benefit the common man.
“Disposable income in the hands of households will increase, giving people more room to spend compared to before,” Sharma said.
Economists agree that the proposed changes in GST will not only simplify the indirect tax system but also provide a strong stimulus to consumption-led growth in the Indian economy.
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