Goods and Services Tax reforms: How much savings can a household expect? Report says...

The Federation of Indian Chambers of Commerce and Industry (FICCI) has said in a report that the new Goods and Services Tax (GST) structure will provide Indian households with massive tax savingsof between 27 per cent and 30 per cent.

The Federation of Indian Chambers of Commerce and Industry's Committee Against Smuggling and Counterfeiting Activities Destroying the Economy (FICCI CASCADE), along with the Thought Arbitrage Research Institute (TARI), said in the report that the new structure has provided relief to families in rural and urban India by easing tax on both essential and discretionary items.

The Central government has eliminated the 12 per cent and 28 per cent GST slabs and placed the goods and services in these categories into the 5 per cent and 18 per cent GST slabs. The government has also levied a flat 40 per cent tax on sin goods, including luxury cars and tobacco products.

GST rationalization has potentially placed more money into the hands of the masses by lowering tax on most goods and services. The government took these measures to boost domestic consumer spending.

The Centre is monitoring whether these companies will pass on the GST benefits to the consumers or not.

The report noted that the government has placed 149 items in the lowest 5 per cent tax rate. In the previous GST structure, the figure was 54.

Apart from household savings, GST 2.0 is also seen to be supporting small businesses and pushing further formalization of the Indian economy. By lowering tax rates and reducing price differences, the report states.

The report said that with the lower tax rates, pressure on consumption will be eased.

It said that the reform promotes fairness in taxation and creates a level playing field. It has also reshaped the way people and businesses interact with the Indian economy.