GST Simplified: GoM Backs 5% & 18% Slabs, Consumers to Gain from Lower Prices

Bihar Deputy Chief Minister Samrat Choudhary on Thursday said that the Group of Ministers (GoM) has endorsed the Centre’s proposal to simplify the Goods and Services Tax (GST) structure by retaining only two slabs—5% and 18%—while eliminating the existing 12% and 28% categories. He, however, stressed that the final decision will rest with the GST Council.

“We have supported the two proposals by the Government of India, of scrapping GST slabs of 12% and 28%,” Choudhary told reporters after the meeting with Union Finance Minister Nirmala Sitharaman. “Everyone made suggestions over the proposals made by the Centre. Some states have a few observations. This has been referred to the GST Council. The Council will make a decision.”

The recommendation aligns with Prime Minister Narendra Modi’s Independence Day announcement of a GST restructuring aimed at streamlining the tax system, reducing disputes, and improving ease of living. Under the Centre’s blueprint, the standard rate of 18% would apply to most goods and services, while 5% would be levied on essentials. Special rates would continue for a limited set of items.

At the same time, the GoM has proposed raising the ceiling for GST to 40%, ensuring that luxury goods such as premium cars and sin products like tobacco continue to attract higher levies despite the slab cuts.

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Some states, however, voiced concerns over the potential impact on revenues. West Bengal’s Health Minister Chandrima Bhattacharya said, “All the states are with the common people, but I raised in the meeting that if the states are going to lose revenue, then that ultimately goes back to the common people. We want to know how we are going to be compensated.” She added that the issue of revenue loss has not yet been fully assessed and will likely be discussed at the GST Council meeting.

Uttar Pradesh Finance Minister Suresh Khanna echoed the need for clarity. “The presentation given at the Centre did not mention how much loss is being incurred, so we cannot say how much loss there will be. But our point is that the common people should benefit from this,” he said.

The GST Council, in its upcoming session, will take up the GoM’s recommendations, including reclassification of goods currently taxed at 12% and 28%. The Council’s decision will determine how India’s indirect tax structure is reshaped in the coming months.