Indian Government Pledges GST Slab Rate Reform Amid Trader Demands

The rhythmic pulse of commerce across India’s markets echoed in New Delhi this week as top government ministers personally vowed to champion traders’ demands for simpler taxes. At the 44th Foundation Day of the Bhartiya Udyog Vyapar Mandal (BUVM), Union Ministers Arjun Ram Meghwal and Harsh Malhotra pledged to act as “advocates” for businesses struggling with GST slab rate complexities and regulatory burdens. This rare assurance signals potential shifts in India’s tax landscape for 28 million traders represented by the influential association.

What GST Reforms Are Indian Traders Demanding?

For years, fragmented tax structures have hampered small businesses. The BUVM’s primary grievance targets India’s multi-tiered GST slab rate system, which they argue stifles growth. Currently, rates span 0%, 5%, 12%, 18%, and 28%, creating compliance chaos for MSMEs. BUVM President Babu Lal Gupta presented a radical solution: condense rates into just three slabs—0% for essential foods, 5% for common goods like edible oils and LED lamps, and 18% for all other products. “This rationalisation will boost GDP,” Gupta asserted, citing compliance costs that divert resources from innovation.

Beyond GST, the BUVM highlighted crippling inconsistencies in agricultural Mandi taxes (0-4% across states) and urged nationwide uniformity. The group also renewed calls for an e-commerce regulator to ensure fair digital competition—a demand gaining urgency as online giants reshape retail.

Government Responds with Unprecedented Commitment

In a powerful gesture, Law Minister Arjun Ram Meghwal declared solidarity: “We stand with traders and will address business concerns.” Corporate Affairs Minister Harsh Malhotra acknowledged GST’s “scope for improvement,” promising to escalate issues to Finance Minister Nirmala Sitharaman. Their commitments carry weight—Malhotra noted traders’ pivotal role in making India the world’s fourth-largest economy.

The ministers’ pledge responds to years of BUVM advocacy. Since 1981, the association has shaped policies through relentless dialogue with regulators. Their 2023 push aligns with Prime Minister Modi’s “ease of doing business” agenda but stresses unresolved pain points like TDS (Tax Deducted at Source) and TCS (Tax Collected at Source). BUVM leader Satish Agarwal argued these mechanisms burden taxpayers, especially when states fund “freebies.”

Three-Slab Model: Simplicity or Oversimplification?

The proposed 0%/5%/18% GST slab rate framework aims to balance revenue and relief. Gupta detailed specific categorizations:

• 0% slab: All unpackaged foods
• 5% slab: Solar heaters, handicrafts, hotel rooms under ₹1,000/day
• 18% slab: Remaining goods

Economists debate whether collapsing rates could dent state revenues. However, Gupta countered that streamlined compliance would widen the tax net, citing global models like Singapore’s single-rate GST. The pitch mirrors the 15th Finance Commission’s past recommendations for fewer slabs to reduce litigation and fraud.

For India’s backbone businesses, this week’s high-level engagement marks a turning point. As ministers personally champion traders’ calls for rationalized GST slab rates and fair digital rules, 2024 could finally deliver the tax simplicity millions deserve. The journey starts now—contact your industry association to add momentum.

Must Know

Q: What is BUVM’s role in Indian trade policy?
A: Founded in 1981, the Bhartiya Udyog Vyapar Mandal (BUVM) represents traders across 28 states. It negotiates with ministries to shape business-friendly regulations, from GST reforms to e-commerce rules.

Q: How many GST slabs exist currently?
A: India has five primary GST rates: 0%, 5%, 12%, 18%, and 28%, plus special categories. The BUVM seeks to reduce these to three slabs (0%, 5%, 18%).

Q: Why does BUVM oppose variable Mandi taxes?
A: State-level Mandi taxes range from 0% to 4%, disrupting supply chains. BUVM demands uniform national rates to ease interstate trade.

Q: What products would shift under BUVM’s 5% GST proposal?
A: Edible oils, bakery items, solar heaters, toys under ₹1,000, and hotel rooms below ₹1,000/day would move to 5% from higher slabs.

Q: How would a three-slab GST boost the economy?
A: Simpler compliance frees MSME resources for investment and hiring, while reduced litigation strengthens tax revenues long-term.