On September 3–4, GST Council, led by Finance Minister Nirmala Sitharaman, will convene to deliberate on implementing a two-slab tax system. The two-day meeting will take place in New Delhi, according to an office memo from the GST Council Secretariat.
Key Highlights
- GST Council convenes in New Delhi, chaired by FM Sitharaman, to deliberate on sweeping GST reforms.
- Agenda focuses on simplifying tax structure—moving to two slabs (5%, 18%) with a special 40% rate for sin goods.
The three GoMs' recommendations on rate rationalization, compensation cess, and health and life insurance will be discussed by the council, which is made up of the finance ministers of every state and UT in addition to the Center.
At their meeting earlier this week, the state ministers who make up the Group of Ministers (GoM) agreed, in principle, to the Center's proposal for a two-slab GST.
As per the Center's proposed reform to the GoMs, the Goods and Services Tax (GST) ought to have two rates of 5 and 18 percent, which would categorize goods and services as "standard" and "merit." Ultra-luxury cars and sin goods are among the few items that will be subject to a special rate of 40%.
There are currently four levels of GST: 5, 12, 18, and 28 percent.
Also Read: Finance Minister: GST Reforms to Bring Relief for Middle Class and Farmers
What Will Be Cheaper After Two GST Slabs?
- Most everyday items will soon fall into the 5% GST bracket, making them more affordable.
- Almost 99% of items currently in the 12% category are expected to move to the 5% bracket.
- Approximately 90% of goods under the 28% slab are expected to move down to the 18% slab.
- Farm equipment, handicrafts, medicines, and insurance services will all see lower tax rates.
- Certain products that were previously taxed at 18% may be moved to the 5% slab or become tax-free.
- Items related to rural employment are also proposed to have lower GST rates.
