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3:13 pm - Thursday December 16, 8579

More Changes in GST

The Government has decided to make further changes in tax structure of GST system. Launched this year on 1st July 2017 it was made of 4 Tax slabs 5-12-18 and 28 per cent.

Soon it was realized that inclusion of so many items in 28 per cent were too much particularly such a high slab taking foods in hotels. In cities many people stay alone or away from their families who take foods in hotels.

In first changes the items of 28 per cent were trimmed and only unhealthy items like tobacco products, cold drinks, pan masalas and luxury items were retained in it. Now the Government has decided to merge two tax slabs of 12 and 18 per cent to keep GST at 3 grade taxation instead of 4 grades.

It is likely the slab 12 per cent will go up by 3 per cent and slab of 18 per cent will come down by 3 per cent to become 15 per cent tax slab. Many items under 12 per cent will be lowered to 5 per cent taxation. The Union Finance Minister Mr.Arun Jaitley indicated rationalization in GST system.

But it will depend as how revenue collections stabilize. The growth rate of India is almost stabilized between 7 to 8 per cent. When it comes down it is at 7 per cent and when improves it go up to 8 per cent. The target is of 10 per cent, growth rate but it will take some time for economy and investment climate to improve.

The 95 per cent of tax collections come from the 4 lakh trading accesses who pay tax regularly and remaining five per cent from small and middle stage trading communities.

In the 10 years time 60 lakh crores were spend on building up growth oriented infrastructure. Now the country need investment of 50 lakh crores of rupees. The Indian economy is around 2.5 lakh crores dollars. Mr.Jaitley hinted that spending on basic infrastructure and rural sector will be the focus areas of next budget.

For investment banks must have capital. The bad loan in the form of NPA is the cause of concern for the economy. The recovery powers to banks, insolvency act and budgetary support to Government commercial banks are measure being taken to improve and secure banking sector.

The Union Finance Ministry and the Reserve Bank of India is looking into capital requirements of the public sector banks.

Posted in: Editorial

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