Daijiworld Media Network – New Delhi
New Delhi, Aug 21: In a major push toward tax simplification, the Group of Ministers (GoM) on GST rate rationalisation has approved the Centre’s proposal to cut the current four-slab structure down to two, Bihar deputy chief minister Samrat Choudhary confirmed on Thursday.
Choudhary, who chairs the GoM, announced that the panel has endorsed the plan to scrap the 12% and 28% tax rates, effectively leaving only two standard GST slabs: 5% and 18%. “The proposal has been accepted by the GoM,” Choudhary told reporters after the meeting, according to PTI.
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The move is part of a broader reform package proposed by the Centre, which argues that a streamlined rate structure will make the indirect tax system more efficient and citizen-friendly, while boosting compliance. Finance minister Nirmala Sitharaman, addressing the GoM earlier this week, said the revamped GST framework would usher in a “transparent and growth-oriented” tax regime.
As per the proposal, 99% of items currently taxed at 12% will be moved to the 5% slab, while 90% of goods under the 28% category will shift to 18%. A higher 40% GST rate is expected to remain on five to seven so-called “sin goods,” including tobacco and luxury products.
The GoM comprises six ministers: Suresh Kumar Khanna (Uttar Pradesh), Gajendra Singh (Rajasthan), Chandrima Bhattacharya (West Bengal), Krishna Byre Gowda (Karnataka), K N Balagopal (Kerala), along with Choudhary from Bihar.
The rationalisation talks came a day after another GoM meeting where most states supported a separate proposal to exempt individual health and life insurance premiums from GST —despite a potential revenue loss of Rs 9,700 crore annually. States, however, called for safeguards to ensure these tax savings are directly passed on to policyholders.
The twin proposals — rate rationalisation and insurance relief — signal a shift towards a more streamlined and socially responsive GST regime, ahead of a possible national rollout in the coming months.