GoM Clears Proposal to Scrap 12% and 28% GST Slabs, Majority of Goods Likely to Get Cheaper

GoM Endorses Two-Slab GST Structure; Everyday Goods Likely to Get Cheaper

The Goods and Services Tax (GST) regime is set for a major revamp, with the Group of Ministers (GoM) on rate rationalisation approving a plan to cut the number of slabs from four to two. At its meeting on Thursday, the GoM backed the Centre’s proposal to replace the 5%, 12%, 18% and 28% structure with just two main rates of 5% and 18%. The move, dubbed GST 2.0, aims to simplify compliance and ease the burden on consumers.

Under the plan, the 12% and 28% slabs will be scrapped. About 99% of items taxed at 12% will shift to 5%, while nearly 90% of goods under 28% will move to 18%. A 40% levy will remain on “sin goods” such as tobacco and luxury cars.

Everyday essentials including medicines, processed food, footwear and clothing will move to the lower 5% slab, while consumer durables like TVs and appliances will drop from 28% to 18%. The GoM also reviewed a proposal to exempt health and life insurance from GST, which could lower costs for policyholders but reduce government revenue by around ₹9,700 crore annually. States have sought safeguards to ensure insurers pass on the benefit.

Chaired by Bihar Deputy CM Samrat Choudhary, the panel’s recommendations will now be sent to the GST Council for approval. If cleared, the two-slab system would mark the most significant reform since GST’s rollout in 2017.