Shimla, Sep 4 (PTI) The state government, opposition and farmers' body have hailed the decision to slash Goods and Service Tax (GST) on several items and eliminate 28 per cent and 12 per cent slabs, describing it a big relief to people.

"The Congress party has been pressing for these reforms for a long time, and finally, the GST council has taken a decision, which is in the larger interest of the country as multiple slabs were putting a heavy burden on consumers," Naresh Chauhan, Media advisor to Chief Minister Sukhvinder Singh Sukhu, said on Thursday.

The GST system was cumbersome right from the beginning due to many slabs, and Congress leader Rahul Gandhi had launched a campaign for the rationalisation of GST slabs. Though the decision has been taken very late, it is a welcome step, he added.

The reduction in GST on several items would definitely cause revenue loss to Himachal, as it has a small consumer base, and what steps would be taken by the GST Council to compensate the state is yet to be seen, as the Centre has already stopped GST compensation from 2022, Chauhan noted.

Under the VAT regime, the tax was collected on a production basis, and Himachal was getting about Rs 2,500 crore in the Industrial belt, which has now been reduced to just Rs 300 crore as the GST is recovered on the basis of consumption, and the chief minister has taken up the matter with Union Finance Minister Nirmala Sitaraman, Chauhan said.

Leader of the opposition and former Himachal chief minister Jai Ram Thakur said that Prime Minister Narendra Modi announced on August 15 that major reforms would be brought in GST, and the GST Council has taken a decision, which will give big relief to people, particularly to the agriculture community, as agricultural inputs and other equipment would be cheaper.

Further, major relief has been given in medicines, and tax has been completely abolished on generic and life-saving drugs, and other drugs attract five per cent tax, he said, adding that it would not only be a relief for people but also boost "Swadeshi products".

Fruit Vegetable Flower Growers Association President of the state Harish Chauhan thanked the government for reducing the tax on agricultural equipment, bio-fertilisers and other inputs, and said the reduction of tax on cardboard boxes would be a major relief for horticulturists and farmers.

However, the farmers would benefit immensely if GST was reduced to zero per cent from five per cent, he told PTI Videos here. PTI BPL BAL BAL

GST slab rationalisation reduces rates and abolishes highest slabs, easing tax on agricultural inputs and medicines. The GST Council has rationalised slabs by eliminating the former highest rates and reducing taxes on multiple items, notably agricultural equipment, bio fertilisers and cardboard boxes, and by abolishing tax on generic and life saving drugs while taxing other medicines at a low rate. The changes will lower consumer prices but are expected to reduce consumption based GST revenues for smaller states, raising concerns about compensation after central compensation arrangements ended.