The Group of Ministers (GoM) on Thursday endorsed the removal of the 12% and 28% GST slabs, with certain suggestions. The proposal will now move to the GST Council for final approval, in line with Prime Minister Narendra Modi’s Independence Day call to rationalize the indirect tax regime.
Aim: Simpler Taxes and Lower Costs
The overhaul is designed to reduce compliance burdens, simplify the GST structure, and cut taxes on everyday essentials like snacks, soaps, and appliances.
Finance Minister’s Assurance
At the August 20–21 GoM meeting, Finance Minister Nirmala Sitharaman called the reform a “lifeline” for farmers, MSMEs, the middle class, and the common man.
Key Highlights of the GST Shake-Up
Two-bracket makeover – 5% for essentials, 18% for standard goods.
Major rate cuts – Most items from the 12% slab to drop to 5%; most from the 28% slab to 18%.
New sin tax – A 40% rate for tobacco, pan masala, and other harmful goods.
Revenue impact – Short-term loss expected, but a wider tax base and higher consumption may balance it out.
What’s Next for GST Reform
The GST Council will take the final call. If approved, the changes could roll out as early as September or by October in time for the festive season.
Mixed Reactions Across Stakeholders
While critics worry about state revenue losses, MSMEs, industry leaders, and consumers have largely welcomed the move as a boost to spending and growth.
