In a meeting scheduled on August 20-21 in the national capital, the Center has proposed rationalizing GST rates through a two-tier structure comprising 5% and 18% slabs, along with a special 40% rate on select items. The proposal includes eliminating the current 12% and 28% tax slabs.
According to sources, while the Center is not part of the ministerial group, the presence and address of the Union Finance Minister will help the group better understand the government’s rationale behind the reforms. The 18% slab is expected to continue contributing the largest share to GST revenue, around 65%. Many products currently taxed at 28% will be moved to the 18% slab.
Under the Center’s proposal, around 99% of items currently in the 12% slab will be shifted to the 5% slab, and 90% of products from the 28% slab will fall under a new 15% slab. Only a select few items will attract the special 40% rate.
The government aims to simplify the GST structure, reduce the number of slabs, and boost revenue collection. The proposal also suggests lowering GST on products like air conditioners from 28% to 18%, which is expected to reduce prices by ₹1,500 to ₹2,500 and increase demand during the upcoming festive season.
