Centre Proposes Major GST Overhaul with Two-Slab Structure
The new proposal, with 5% and 18% rates, moves most items from higher slabs and introduces a special 40% rate for luxury and sin goods.
- The Centre has proposed a new two-slab GST structure of 5% and 18%.
- 99% of items from the 12% slab would move to 5%, while 90% from the 28% slab would go to 18%.
- Luxury and sin goods will face a special 40% rate.
GG News Bureau
New Delhi, 15th Aug: The Centre has proposed a major revamp of the Goods and Services Tax (GST) regime, suggesting a simplified two-slab structure. According to sources, the new proposal would retain only the 5% and 18% tax slabs. This move follows Prime Minister Narendra Modi’s Independence Day promise of “next-generation GST reforms,” which he called a “double Diwali” gift for citizens.
Under the new plan, 99% of the items currently in the 12% slab would be moved to the lower 5% slab. Similarly, 90% of the items from the highest 28% slab would be moved to the 18% category. A special 40% rate will be levied on a select list of five to seven luxury and sin goods, such as tobacco and cigarettes, while excluding aspirational items like refrigerators and washing machines.
The proposal aims to boost consumption, which is expected to offset any potential revenue loss from rate rationalization. Petroleum products will continue to remain outside the GST regime. This overhaul, if implemented, would be a significant step toward simplifying the tax structure, making it more citizen-friendly, and stimulating economic activity.
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