Daijiworld Media Network - New Delhi
New Delhi, Sep 19: More than three-fourths of the items on which rural Indians spend money will attract either a nil Goods and Services Tax (GST) rate or just 5% under the revised structure effective September 22, according to an analysis by the Federation of Indian Chambers of Commerce & Industry (FICCI). For urban Indians, the proportion will be about 66%.
The study, conducted by Thought Arbitrage Research Institute (TARI) for FICCI’s CASCADE committee, highlights a marked improvement over the current GST framework. At present, about 56% of rural household monthly expenditure and around 50% of urban household spending fall under the nil or 5% GST slabs.
The analysis compared item-wise GST rates with the government’s monthly per capita expenditure data for both rural and urban households.
Key findings:
• Nil GST: Currently, 29.1% of items face no GST, accounting for 36% of rural and 32.3% of urban monthly expenditure. From September 22, the nil slab will cover 29.9% of items, accounting for 36.5% of rural and 32.9% of urban spending.
• 5% GST: At present, 14.7% of items fall under the 5% rate, representing 20.3% of rural and 18.2% of urban expenditure. Under GST 2.0, this slab will expand to 40.5% of items, covering 38.8% of rural and 33.3% of urban spending.
• 12% GST: Currently 21.5% of items, accounting for 14.4% of rural and 10.8% of urban expenditure, will be phased out entirely.
• 18% GST: This slab now covers 26.6% of items, representing 15.4% of rural and 16.9% of urban spending. It will drop to 23.1% of items and 12.3% and 14.1% of rural and urban expenditure respectively under the new regime.
• 28% & Above: Items taxed at 28% or higher currently form 2.2% of the total and account for 1.7% of rural and 2.3% of urban expenditure. Under GST 2.0, including the new 40% slab, this category will shrink to 0.5% of items and just 0.2% of both rural and urban spending.
The report underscores that the revamped GST structure will significantly reduce the tax burden on daily essentials, particularly benefiting rural households.