To simplify India’s indirect tax regime, the Group of Ministers (GoM) on GST rate rationalisation has accepted the Centre’s proposal to reduce the existing four-rate structure to just two slabs—5% and 18%.
The decision, taken during a high-level meeting chaired by Bihar Deputy Chief Minister Samrat Choudhary, marks a significant shift from the current 5%, 12%, 18%, and 28% framework.
Under the new structure, 99% of items currently taxed at 12% will move to the 5% slab, while nearly 90% of goods and services under the 28% category will shift to 18%. A higher 40% rate will remain applicable to sin goods and luxury items, including high-end cars.
Finance Minister Nirmala Sitharaman emphasised that the rationalisation will benefit the common man, MSMEs, and farmers by making GST more transparent and growth-oriented. The GoM also reviewed a proposal to exempt GST on health and life insurance for individuals—a move that could impact revenues by ₹9,700 crore annually. States largely supported the exemption, provided insurers pass on the benefits to consumers.
The GST Council is expected to take up these recommendations in its upcoming meeting for final approval.
