The centre has recommended reducing the number of slabs under the Goods and Services Tax System, preserving the 5% and 18% slabs but abolishing the 12% and 28% tax categories as part of the "Deepavali gift" to decrease the 'tax burden on the ordinary man'.

The government has also proposed a reduced concessional rate of less than 1% and a high 'sin rate' of 40% on five to seven products apiece. Items currently sitting in the 12% category will be relocated to the 5% rate, while 90% of products and services in the 28% bracket will be moved to 18%. Furthermore, there would be no additional cess on top of the GST rates.

GST reforms a ‘confusing Cocktail’

K.E. Raghunathan, National Chairman of the Association of Indian Entrepreneurs (AIE), expressed his discontent with the proposed GST modifications, referring to them as 'damage control'. He claimed, "The recent GST rate rationalisation announcement is not reform; it is damage control." After seven years of policy blindness, the administration has admitted that GST must be fixed. But what it provides is another perplexing cocktail: 0, 5, 18, and 40%. This is not a simplification. "It's bureaucratic theatre," Raghunathan states in his LinkedIn article with a heading– Cosmetic Tweaks (in GST rate cuts) Won’t Heal Structural Damage.

Raghunathan further adds, “India needs a clean, logical structure like 0 per cent, 8 per cent, and 30 per cent—aligned with global norms. Most countries operate with 5 per cent or 8 per cent slabs. India chose chaos over clarity.”

A ‘People Centric GST approach ‘

Raghunathan has proposed:

• Goods priced below ₹5000: 5 per cent GST
• Services: 5 per cent GST– All other goods: 12 per cent GST

Taking a quip at the GST, national chairman, “This isn’t a rocket science. It’s common sense.”

Need for GST exemption threshold to INR 2 Crore

Commenting over the current GST exemption limits, Raghunathan told, “We demand that the GST exemption threshold be raised to ₹2 crore for both goods and services. The current limits — ₹40 lakh for goods and ₹20 lakh for services — are outdated and burdensome. Raising the threshold will: Eliminate wasteful compliance for micro enterprises, reduce harassment through unnecessary notices, free up software systems from crowding and overload.”

Need a larger seat at the table

Alleging that all decisions and policies for the MSME are being made by bureaucrats and made in closed doors, Raghunathan writes, “Yet notes that GST Council decisions continue to be made behind closed doors. No voice for entrepreneurs. No seat for MSME bodies. Just bureaucrats and ministers deciding for industries (MSME) that they don’t run.”