New Delhi [India], September 4 : Former President of Federation of Indian Chambers of Commerce and Industry (FICCI), Subhrakant Panda said on Thursday that the central government moving towards a two-tiered Goods and Services Tax (GST) shows the "maturation of the whole indirect tax regime," and that the newly announced tax rates fit in with Prime Minister Narendra Modi's vision of Atmanirbhar Bharat (self-reliant India).
"With this big bang reform, there will be a boost to demand. Especially from a common man's perspective, I think, it will provide a lot of relief by bringing down the cost of many everyday items, as well as some of the aspirational items. Overall, I think that is a very significant development," the former FICCI president told ANI.
Highlighting how India's growth is predicated upon a young demography and a large domestic market, he said that the GST reform will further help with "navigation challenges" which might come in the future due to "geopolitical developments."
"It (GST reforms) fits in with honourable Prime Minister Narendra Modi's vision of Atmanirbhar Bharat, because at the end of the day our growth is predicated upon a young demography and a large domestic market. This development will further strengthen the foundation and enable us to navigate the challenges which are likely to arise out of geopolitical developments," Panda said.
Meanwhile, Bharatiya Janata Party Telangana state president N Ramchander Rao also hailed the reforms, saying how despite the tariffs imposed by the United States, most goods under the GSt have seen their taxes reduced or eliminated.
"There has been a change in the economic condition of our country. On the one hand, America is increasing tariffs, but despite this, in our country, the GST has been reduced from 18% to 12% and from 5% to zero. We support the Indian government's decision. Farmers, citizens, middle-class families, and many people of the country will benefit from this," Rao told ANI.
The 56th GST council approved on September 3 to rationalise GST rates to two slabs of 5 per cent and 18 per cent by merging the 12 per cent and 28 per cent rates.
5% slab consists of essential goods and services, including food and kitchen item like butter, ghee, cheese, dairy spreads, pre-packaged foods, agricultural equipment, handicrafts, medical equipment and multiple other things.
The 18% slab consists of a standard rate for most goods and services, including automobiles such as small cars and motorcycles (up to 350cc), consumer goods like electronic items, household goods, and some professional services, a uniform 18% rate applies to all auto parts.
Additionally, there is also a 40% slab for luxury and sin goods, including tobacco and pan Masala, products like cigarettes, bidis, and aerated sugary beverages and on luxury vehicles, high-end motorcycles above 350cc, yachts, and helicopters.
Additionally, GST is not applicable to health and life insurance premiums, as well as education and healthcare services, such as certain services related to education and healthcare, which are also GST-exempt.