GST Council's decision to simplify tax structure will make taxation more 'transparent': IOB

The GST council's decision to simplify the tax structure would make taxation more 'transparent' and boost consumption over 8-10 per cent in rural markets, a top official of public sector Indian Overseas Bank said on Sunday.

The Bank's Managing Director and CEO Ajay Kumar Srivastava said there would be an increased demand across retail, micro, small and medium enterprises and agricultural segments as incomes rise and investments pick up.

"The GST Council's decision to simplify the tax structure from the current four slabs -- 5,12,18 and 28 per cent, to a two-rate structure 5 and 18 per cent will make taxation more transparent and easier to follow," Srivastava said in a press release.

"We expect these measures will drive an estimated growth in consumption over 8-10 per cent in the next two quarters in rural markets, particularly benefitting farmers through reduced costs on agricultural products where GST has been brought down from 12 per cent to 5 per cent," he said.

He underlined that the price cuts on daily essentials like dairy products, household items would provide more relief and reduce the burden to the consumers. "The reduced GST on vehicles, electronics and housing materials will create demand in these segments, while making insurance policies completely tax-free will enhance financial inclusion," he remarked.

The GST reforms would create a strong effect across the economy, leading to improved cash flows for distributors and retailers, greater working capital access for small businesses and expanded credit requirements, he noted.

"Overall, this decision acts as a catalyst for inclusive growth and economic transformation, aligning itself to India's vision of Viksit Bharat" he added.