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Q.
Will GST rate rationalisation actually simplify compliance for small businesses?
20 sec read
What happened
Proposals to reduce the number of GST tax slabs aim to make compliance simpler and reduce classification disputes between businesses and tax authorities. Small businesses have long complained about the complexity of multiple rates and frequent rule changes, while some sectors worry about the revenue impact on the states.
What the evidence says
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Multiple GST slabs have historically led to classification disputes over which rate applies to a given product.
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States rely on GST as a major source of revenue, and rate changes require their collective agreement.
What's unclear
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Whether simplification will reduce actual compliance costs depends on how transition rules are designed.
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