GST 2.0: More Money for People, Lower Costs

New Delhi, Sep 22 (PTI) The next-generation GST 2.0 reform, being rolled out from Monday, will put more money in consumers' hands, ease compliance burden for MSMEs, lower input costs for industry and strengthen India's growth momentum, industry bodies said.

The reduced GST rates on a vast number of items are effective from Monday, which Prime Minister Narendra Modi, in his address on Sunday, had described as a ‘saving festival' (Bachat Utsav).

Urging people to buy indigenous products, he had said that 'Swadeshi' would strengthen the country's prosperity in a similar way it powered India's freedom movement. The industries commended the Prime Minister for the next-generation GST reform.

"The streamlined tax structure, combined with a renewed emphasis on Swadeshi, as outlined by the Prime Minister Narendra Modi, will support domestic production and manufacturing, in keeping with the vision of Aatmanirbhar and Viksit Bharat," FICCI President Harsha Vardhan Agarwal said.

He observed that the revised framework will reduce compliance burden for MSMEs (micro, small and medium enterprises), improve the cost competitiveness of 'Make in India' products, and enhance ease of living.

The Confederation of Indian Industry (CII) termed the next-generation GST reforms as "people-centric".

"CII believes the package framed by the Prime Minister as a GST Bachat Utsav will put more money in consumers' hands, ease compliance for MSMEs, lower input costs for industry, and strengthen India's growth momentum," CII Director General Chandrajit Banerjee said.

The GST will now be a two-tier structure wherein the majority of goods and services will attract tax of 5 and 18 per cent. A 40 per cent tax will be levied on ultra luxury items, while tobacco and related products will continue to be in the 28 per cent plus cess category.

Till now, Goods and Services Tax (GST) was levied in 4 slabs of 5, 12, 18 and 28 per cent. Besides, a compensation cess is levied on luxury items and demerit or sin goods.

Mass consumption items like ghee, paneer, butter, 'namkeen', ketchup, jam, dry fruits, coffee and ice creams, and aspirational goods like TV, AC and washing machines will become cheaper.