The Group of Ministers (GoM) on Thursday expressed support—along with certain suggestions—for the removal of the 12% and 28% slabs under the Goods and Services Tax (GST). The proposal will now be placed before the GST Council for final consideration, marking progress on Prime Minister Narendra Modi’s Independence Day announcement to rationalise India’s indirect tax regime.
If approved, the overhaul would leave only the 5% and 18% slabs from the existing four-tier structure, while a new 40% slab may be introduced exclusively for ultra-luxury goods.
Revenue Loss and State Concerns
The GST Council, chaired by Union Finance Minister Nirmala Sitharaman and comprising finance ministers from all states, will deliberate on the GoM’s report, which includes concerns raised by several states regarding revenue sharing and compensation.
Bihar Deputy Chief Minister Samrat Choudhary, convener of the GoM on Compensation Cess, Health and Life Insurance, and Rate Rationalisation, said:
“Everyone made suggestions over the proposals made by the Centre. Some states had a few observations. This has now been referred to the GST Council.”
West Bengal Health Minister Chandrima Bhattacharya cautioned that the revenue impact of the slab reduction had yet to be clarified.
“I raised in the meeting that if states are going to lose revenue, then we want to know how we are going to be compensated. The GoM will now send its report to the GST Council with our concerns,” she told reporters.
Uttar Pradesh Finance Minister Suresh Khanna also noted that while the Centre’s presentation did not specify potential revenue losses, the guiding principle should be ensuring benefits for ordinary citizens.
Move Towards Simplification
The proposal stems from the Prime Minister’s August 15 address at the Red Fort, where he announced the government’s intent to eliminate the 12% and 28% brackets as part of a broader drive to simplify the GST framework and reduce litigation.
The GST Council is expected to deliberate on the GoM’s recommendations in its upcoming meeting.
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