NEW DELHI: The major changes in GST rates in the 28 per cent bracket and measures to simplify filing and compliance are seen as an effort by the government to correct an "image problem" dogging the tax reform in key consumer and trader constituencies ahead of the Gujarat elections.
It was felt a perception had gained ground that middle class activities like eating out and items like cosmetics and toiletries had become more expensive. "These are everyday consumerables. Also the youth are very much in the eating out category, there was a need to address the issue," said a source.
Well-placed sources stressed that though the changes will improve the acceptability of the reform, the process was not knee-jerk and has been in the works for at least three months. Disagreeing with the opposition claim that it had "pressured" the government, sources said the recommendations of a GST Council sub-committee, delivered a fortnight ago, were the basis for the revisions.
The problem, said a minister involved in the GST deliberations, was not that many items had become costlier but that the earlier levies like VAT and excise were "hidden" and the new regime seemed more upfront. The 28 per cent rate seemed excessive even if the actual differences over previous costs were not significant.
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