“GST 2.0 should not repeat the errors of the previous by creating extra slabs or elevating the height charge. The true reform lies in simplification — two slabs right this moment, and finally one charge tomorrow. That’s the path to larger compliance, fewer distortions, and sustainable income progress,” Nilanjan Banik, Professor at Mahindra College and writer of the report acknowledged.
The report comes within the backdrop of the GST council set to fulfill on September 3-4 to deliberate over transferring to a two-slab taxation of 5% and 18%.
The council, consisting of finance ministers of all states and union territories in addition to the Centre, will take into account the suggestions given by the three group of ministers on charge rationalisation, compensation cess and well being and life insurance coverage.
The report pinpointed on the necessity to keep away from backdoor income units and acknowledged that measures like taxing on most retail worth as a substitute of transaction worth, or exempting sectors akin to insurance coverage from GST with out preserving enter tax credit score, distort GST’s design and pile hidden prices.
The think-tank additionally highlighted moderation of taxes as a progress technique in lieu of it being a ‘income sacrifice’. By decreasing distortions, India can drive larger consumption, develop compliance, and over time generate huge tax collections to gas its ambition of turning into a developed financial system, it mentioned.
The report proposed a ‘Cess Rulebook’ with guardrails on when and the way cesses may be levied, listed, or sundown, as a pitch for transparency with regard to further cesses and surcharges on luxurious and demerit items.
The aim ought to be a clear, predictable tax system that retains the height charge at 18% and progressively converges to a single charge, Suppose Change Discussion board Secretary Normal Ranganath T mentioned, talking on the launch and added that, solely then will GST really grow to be ‘One Nation, One Tax’ and transfer past symbolism.