Home minister Amit Shah has signalled that some goods and services tax (GST) reforms may be on the cards this time. During an exclusive interview with The Economic Times, Shah said that the government is ready for the next stage of GST reforms.
Describing the current system as a significant improvement over India’s fragmented pre-GST tax structure, Shah noted that the unified tax regime had replaced nearly 16 separate taxes and cesses. “And I believe that the Narendra Modi government has, after resolving all the teething problems, now brought GST to the doorstep of the next stage of reforms. I can say that following all stakeholder discussions, we are now ready for the next stage of GST reforms,” Shah told ET.
Highlighting the success of GST implementation, Shah pointed out that States like West Bengal, Uttar Pradesh, Odisha and others, which were lagging in manufacturing, are now benefiting because it has forced businesses to invest in manufacturing locally to avoid extra transport costs because of a common rate. “The earlier picture where only a few western states and Tamil Nadu were able to attract investment for manufacturing is undergoing a change because of GST,” Shah added.
Introduced in July 2017, GST was hailed as India’s most ambitious tax reform. It aimed to simplify the country’s complex indirect tax landscape and unify the domestic market. While revenue collections have improved – monthly GST revenues touched ₹1.73 lakh crore in May 2024 – critics argue that it has not fully lived up to its promise of simplification and inclusivity.
Despite repeated demands, the GST Council, during its 54th meeting in December 2024, did not address the long-standing call for tax relief on life and health insurance premiums.
In a letter to Finance Minister Nirmala Sitharaman in July last year, Road Transport and Highways Minister Nitin Gadkari argued that imposing GST on life insurance premiums was akin to taxing the uncertainties of life.
“The Union feels that the person who covers the risk of life’s uncertainties to give some protection to the family should not be levied tax on the premium to purchase cover against this risk. Similarly, the 18% GST on medical insurance premium is proving to be a deterrent for the growth of this segment of business, which is socially necessary. Therefore, they have urged withdrawal of GST as mentioned above,” he added.
While dates for the next GST Council meeting are yet to be finalised, a recent Moneycontrol report suggested that the council may finally take up the long-pending issue for discussion.
Source from: https://www.outlookbusiness.com/economy-and-policy/gst-20-amit-shah-says-india-ready-for-next-stage-of-tax-reform
