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In a major development in the direction of fixing India’s indirect tax regime, the Group of Ministers (GoM) on GST rationalisation has acknowledged and accepted the Centre’s suggestion to move to a simplified two-rate Goods and Services Tax (GST) structure, that is, 5% and 18%.

GST 5% & 18% Slabs Approved

Bihar Deputy Chief Minister Samrat Choudhary on Thursday, confirmed the decision of adding that the GoM endorsed scrapping the existing 12% and 28% GST slabs.

This GST sanction line up with the reformational blueprint of Central Government’s unveiled on August 15, focusing on three pillars: structural reforms, rate rationalisation, and ease of living.

PM Narendra Modi addressed GST reform in his Independence Day speech

PM Narendra Modi, in his Independence Day speech, emphasized the necessity for GST variations that support the middle class, farmers, MSMEs, and everyday consumers, stressing GST as a revolutionary transformation since its 2017 launch.

Najib Shah, past Chairman of the Central Board of Excise and Customs (CBEC), welcomed the GoM’s acceptance as “phenomenal.” He noted that the move makes things easier in the tax structures and fulfills long-standing demands for rationalization. “The GST Council will now deliberate, but given the cross-party nature of the GoM, it’s unlikely the proposal will be rejected,” he added.

Shah also proposed that while revenue concerns persist, the Centre’s guarantees to the GoM likely address those fears. “The expectation is that simpler rates will boost demand, raise consumption, and ultimately drive revenue upward.”

GST Reform: Strengthening duty Structure with Ease of Living

According to the government’s strategy, structural reforms will address inverted duty structures and classification issues, while rate rationalization will line up taxes with affordability and sustainability. At the same time, ease of living initiatives will modernize submission with tech-driven tools, pre-filled returns, and faster refunds, mostly aiding exporters and MSMEs.

The GST Council is likely to take up the proposal in its next meeting, possibly marking a pivotal shift in India’s tax landscape.

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