The central government has not quantified the potential revenue loss from a planned reduction in goods and services tax (GST) rates, but a panel of state finance ministers has endorsed the new structure.
The government plans to overhaul GST from October by moving to a two-rate system of 5 percent and 18 percent, eliminating the current 12 percent and 28 percent slabs, a senior official said.
The state ministers’ panel has also recommended an additional levy on high-end luxury cars and other “sin goods,” to be taxed at 40 percent, one minister said. A separate proposal calls for exempting health and life insurance premiums for individuals from GST.
The final decision rests with the GST Council, chaired by the federal finance minister and comprising state finance ministers. The council is expected to meet in September or October, ahead of the Diwali festival season in late October, typically India’s biggest shopping period.