Economic Policy

Economic Policy

GST Council keeps tax rate same, but defers key reforms

  • The Goods and Services Tax (GST) Council met over video conference under the chairmanship of Union Finance Minister Nirmala Sitharaman
  • Important decisions taken at the council
  • Decision to scrap the 5% GST levy on a cattle feed ingredient — husk of pulses
  • Reduction of the levy on ethyl alcohol used by refineries to blend with petrol to 5% from 18%
  • Extending the 5% tax levy for ethyl alcohol, allowed for oil marketing companies to blend with petrol, to refineries will further reduce our dependence on imported crude and save the foreign exchange.
  • Decriminalisation of petty GST offenses.
  • Doubling of threshold limits of tax amounts for initiating prosecution from 1 crore to 2 crore for all offences other than those involving fake invoices.
  • The compounding amount under certain offenses has been reduced from 50% to 150% of the amount, to 25% to 100% of the amount involved
  • However, the decisions would take time to implement as States would have to amend their respective GST legislations, while the Centre would include these changes in the Finance Bill of 2023-24.

About GST:

    • GST was launched on July 1, 2017 through 101st Constitution Amendment Act, 2016 by amending the Artcile 279A
    • GST had replaced the old Indirect tax regime in India
    •  It was introduced with the idea of “One Nation- One Market- One Tax”.
    • 2022 marks the Fifth Anniversary of GST.
    • GST is an indirect, multi-stage, consumption-based tax system. It subsumes several domestic indirect taxes like service tax, purchase tax, value-added tax, excise duty, and others under one head.
    • It does not include Petroleum, Liquor, and stamp duty.
    • The Three taxes application under the GST are CGST (Central) SGST (State) and IGST (integrated)
  • The Four tax slabs are 5%, 12%, 18%, 28%.

About GST Council 

  •  It is a constitutional body for making recommendations to the Union and State Government on issues related to Goods and Service Tax. 
  • 2. It is chaired by the Union Finance Minister and other members are the Union State Minister of Revenue or Finance and Ministers in-charge of Finance or Taxation of all the States.


< Previous Current Affairs Next Economics >