60 goods and services likely to witness tax cut under GST 

At a time when the inflation is on a rise and the growth of the economy has slowed down, the Finance Ministry has signaled for a tax cut for about 60 goods and services under GST. Finance Minister Arun Jaitley is expected to propose the tax cut in the GST Council meeting on Friday as a part of the government’s broader strategy to fuel the economy. 

According to market sources, the tax cut is likely to take place for the goods stacked in the highest tax slab of 28 per cent. While certain goods and services in the 18 per cent tax slab are also expected to witness a tax cut to get accommodated in the 12 per cent tax slab.  

In order to compensate for the loss of revenue for the states in the absence of taxes such as VAT and octroi in addition to the cost of implementation of the new tax system, the centre will pay a compensation to the states. The compensation will be  sourced from the ‘GST Compensation Cess’ levied on luxury and sin goods such as tobacco, for a period of five years. 

The government is also planning to introduce measures such as a relaxed timeline for filing returns for SMEs, deferred reverse charge mechanism, reopening of registration for composition scheme and fastening the tax refunds for exporters in a bid to reduce the compliance burden accompanying GST, which is largely marred with technical glitches and procedural hassles.