FM Sitharaman to meet captains of industry on GST reforms

Finance Minister Nirmala Sitharaman will meet representatives of the Confederation of Indian Industry on Tuesday evening to discuss the roll out of reforms in the Goods and Services Tax (GST) regime, according to sources.

The Finance Ministry will seek inputs and representations from industry leaders on the proposed rate rationalisation, the future of the compensation cess, and broad structural reforms as part of the GST 2.0 reforms.

The meeting will be attended by the Secretaries of the Ministry of Finance, and officials from the Ministry of Corporate Affairs, sources said.

The industry leaders are expected to give their inputs in shaping the reform roadmap and make a presentation on their views which will be considered to get a wider picture on the ground realities and any problems that may need to be addressed.

The Finance Ministry has initiated the exercise amid the ongoing process of rationalising the GST structure to enhance ease-of-doing-business and boost consumption to accelerate growth in the economy.

The proposals that are under consideration include a simplification of the GST system by reducing the number of tax slabs to three from the four-tier system at present.

The Centre is in favour of a system with tax categories, comprising the 5 per cent, 18 per cent, and 28 per cent slabs. This would require the phasing out of the 12 per cent tax slab with goods in this bracket being merged into the other three tax slabs. The simpler system is expected to reduce litigation, improve compliance, and help in giving a fillip to consumer demand which in turn would spur growth in the economy.

A simpler classification of goods would enable the resolving ambiguities which lead to tax disputes, especially in the case of food products. These disputes lead to long-drawn litigation that locks up the government’s revenue. 

It also results in making it more difficult to business which reduces investment in the economy and slows down growth and job creation. The reforms are aimed at bringing more clarity and uniformity to the tax rate that has to be levied on various products.