GST revamp on track: GoM backs Centre’s two-slab plan; accepts scrapping 12% and 28% rates

NEW DELHI: The Group of Ministers (GoM) on GST rate rationalisation accepted the Centre’s proposal to reduce the current four-slab structure to two, Bihar Deputy Chief Minister Samrat Choudhary said on Thursday. The GoM, chaired by Choudhary, endorsed the move to scrap the existing 12 and 28 per cent rates, leaving just two standard slabs of 5 and 18 per cent. “The proposal has been accepted by the GoM,” Choudhary said after the meeting, as quoted by PTI. This comes after, the Centre proposed reforms, in which it has argued that rate rationalisation would simplify the indirect tax system while ensuring relief for households, farmers, the middle class and MSMEs. Finance Minister Nirmala Sitharaman told the GoM earlier this week that the reform would create a “transparent and growth-oriented” regime. Under the plan, 99 per cent of items currently taxed at 12 per cent would be shifted to the 5 per cent slab, while 90 per cent of those under the 28 per cent bracket would move to 18 per cent. A higher 40 per cent levy is likely to be retained on 5–7 “sin goods.” The six-member GoM also comprises Uttar Pradesh finance minister Suresh Kumar Khanna, Rajasthan health minister Gajendra Singh, West Bengal finance minister Chandrima Bhattacharya, Karnataka revenue minister Krishna Byre Gowda and Kerala finance minister K N Balagopal. The rationalisation discussions follow a separate GoM meeting on Wednesday, where most states backed a proposal to exempt health and life insurance policies for individuals from GST, despite an estimated annual revenue loss of Rs 9,700 crore. States had emphasised the need for mechanisms to ensure benefits are passed on to policyholders.