Prime Minister Narendra Modi delivered the keynote address at the inaugural Republic Summit on Tuesday, speaking on the theme of 'Surging India'. While doing so, he made a blockbuster announcement about a change to the current GST categorisation that may have far-reaching effects for both the end users as well as others in the value chain by stating that the government is working towards bringing 99% of goods and services into the 18%-or-less GST bracket.
"We have reached a point where 99% things will be brought under 18% GST charges. We are heading towards a direction where only minimum items will be under the slab of more than 18% which all also be only luxury products. I will make sure that GST will be made simple or easier. I and my government will ensure that we see and fulfill bigger dreams", the Prime Minister said.
In the lead up to his announcement, that is likely to have the effect of lowering the overall tax incidence on a basket of goods and services, the Prime Minister had extolled the historic tax reform, highlighting how it had led to a marked increase in the tax-payer base:
"The entire country took the initiative to bring change with the tax reforms. They made their contributions to the development. It is the hard work of the people that India was able to bring such a huge reform. Even in many developed countries, it is quite difficult to bring small tax reforms. As I said earlier, before the introduction of GST, while registered enterprises were numbered 66 lakhs, now the number has increased to 1 crore 20 lakhs. While the GST was still new, slowly and steadily discussions took place with economists, tax reformers, business holders, and now the GST system has settled down to a large extent in the country," PM Modi said during his keynote speech.
The change in the GST structure, especially with just months to go before the all-important 2019 Lok Sabha elections, apart from decreasing the tax burden on the end users, also takes away the major pain point that the opposition had insisted on flagging about GST -- that with four tax slabs, it was too complex.
For the entirety of the time since GST was rolled-out effectively unifying the country into one market, the government has maintained that it was a work in progress and that they are constantly speaking to stakeholders, especially the various states in order to streamline the goods and services tax. In response to the Opposition's attacks, the Prime Minister had coined another acronym for the GST, calling it the 'Good and Simple Tax'.