New Delhi: A major change in GST rates is on the way. In a key meeting, the Group of Ministers (GoM) on GST has approved the Centre’s proposal to simplify the tax structure.
Only Two Main Tax Slabs Proposed
The current GST system has four tax slabs — 5 percent, 12 percent, 18 percent, and 28 percent. The new proposal suggests keeping only two main slabs:
- 5 percent for essential goods
- 18 percent for standard goods
- 40 percent Tax on Harmful Products
Goods like tobacco and pan masala, which are harmful to health, may be taxed at a special rate of 40 percent under the new system.
Why the Change?
The government wants to:
Make the tax system easier
Give relief to the common people, farmers, middle class, and MSMEs
Ensure transparency and simplicity
Approval by GoM Led by Bihar Deputy CM
The six-member GoM, led by Bihar Deputy Chief Minister Samrat Choudhary, has agreed to replace the current four-tier GST system with the proposed two-tier system.
Finance Minister’s Statement
Finance Minister Nirmala Sitharaman said that this change will help people and small businesses, and will make the GST system more user-friendly and clear.
Current GST Slabs at a Glance
- 0 percent or 5 percent: Food and essential items
- 12 percent & 18 percent: Most services and goods
- 28 percent + cess: Luxury and harmful products
These will now be merged into a simpler two-rate system if the proposal is fully approved.
