The Goods and Services Tax (GST) in India has been in place for several years now, but its complicated structure and multiple slabs continue to pose challenges for businesses and consumers alike. The GST was introduced with the aim of streamlining the taxation system in the country and creating a single tax regime. However, the current structure with multiple tax slabs has resulted in confusion and compliance issues.

One of the main problems with the current GST structure is the high number of tax slabs. Currently, there are five slabs – 0%, 5%, 12%, 18%, and 28%. While the intention behind having multiple slabs was to accommodate different types of goods and services and their varying tax rates, it has led to complexities. Businesses need to classify their products under the correct tax slab, which can be a daunting task given the varied nature of goods and services.

The multiple slabs also make the tax calculation process more cumbersome. Businesses need to maintain separate records and perform separate calculations for each slab, adding to the administrative burden. Consumers also struggle to understand the tax implications of different products and services, as the rates vary widely across different categories.

Another issue with the current structure is the frequent changes in tax rates. Over the years, the government has made several revisions to the GST rates, leading to further confusion and compliance challenges. Businesses need to stay updated with the latest rate changes and make adjustments accordingly, which can be time-consuming and costly.

To address these problems, there have been calls to move to a three-slab system in GST. This would involve simplifying the tax structure by reducing the number of slabs to three – a lower rate slab, a standard rate slab, and a higher rate slab. The exact rates for these slabs would need to be decided based on a careful analysis of the revenue implications and the impact on different sectors.

Rangarajan, a renowned economist, has also advocated for a three-slab system in GST. He believes that a simplified tax structure with fewer slabs would make the GST more efficient and easier to comply with. It would reduce the compliance burden on businesses and improve tax collection by making the system more transparent.

Implementing a three-slab system would require careful planning and coordination among various stakeholders. The government would need to analyze the impact on revenue collection and ensure that the rates are set at a level that is revenue-neutral overall. It would also require businesses to make changes to their accounting systems and update their processes to align with the new structure.

In conclusion, the current multiple slab structure of GST poses challenges for businesses and consumers. Moving to a three-slab system could simplify the tax structure and streamline the GST process. However, any changes should be carefully planned and implemented to ensure that they do not result in unintended consequences or revenue loss for the government.