A six-member Group of Ministers chaired by Bihar Deputy CM Samrat Choudhary will meet on August 21 to examine the Centre’s GST rate rationalisation plan, which proposes two primary tax slabs of 5% and 18%.
New Delhi : A high-level panel of state finance ministers will meet on August 21 to deliberate on the Centre’s proposal for GST rate rationalisation, a major reform aimed at simplifying India’s indirect tax structure. The six-member Group of Ministers (GoM), chaired by Bihar Deputy Chief Minister Samrat Choudhary, will review the proposal and submit its recommendations to the GST Council.
The Centre’s plan seeks to restructure the Goods and Services Tax (GST) into two principal slabs—5% and 18%—by merging and reclassifying several categories. As part of the proposed changes, most items currently taxed at 12% would move into the 5% bracket, while a large portion of products now falling under the 28% slab would be brought down to 18%. However, a higher rate of 40% would be retained for “sin goods” such as luxury products and items deemed socially harmful.
The GoM includes finance ministers from Kerala, Uttar Pradesh, Rajasthan, West Bengal, Bihar, and Karnataka. Their discussions are expected to focus on classifying goods and services into ‘merit’ and ‘standard’ categories, striking a balance between revenue needs and consumer relief.
Ahead of the meeting, Union Finance Minister Nirmala Sitharaman held consultations with several GoMs on August 20 on issues ranging from compensation cess and insurance to broader tax reforms. Emphasizing the rationale behind the proposed overhaul, Sitharaman said, “The rate rationalisation will provide greater relief to the common man, farmers, the middle class and MSMEs, while ensuring a simplified, transparent and growth-oriented tax regime.”
This is the first time the Centre has formally presented its own GST rejig blueprint, as earlier rationalisation efforts were largely driven by the GST Council and its sub-panels. Previously, the rate rationalisation panel was tasked with addressing duty inversions and making sector-specific corrections, but the new proposal seeks to introduce sweeping structural changes.
If endorsed by the GoM, the recommendations will be placed before the GST Council at its next meeting in September, where both the Centre and state finance ministers will jointly decide the way forward.
Economists see the reforms as potentially transformative for India’s economy. UBS Securities, in a recent note, suggested that the new GST structure could act as a powerful stimulus to consumption. “This potential policy stimulus, along with personal income tax relief ($15 billion), front-loaded rate cuts (100 bps YTD), softer inflation, and improved credit availability, should support household consumption over the next 2–3 quarters,” said Tanvee Gupta Jain, Chief India Economist at UBS Securities.
If implemented, the overhaul could mark a major shift in India’s indirect tax system, offering relief to households and businesses alike while aiming to sustain revenue buoyancy for the government.
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