The GST Council is set to deliberate a sweeping overhaul of India’s indirect tax regime, with a proposal to slash the current four-tier structure to just two slabs—5% and 18%—potentially lowering tax on a wide range of household goods, The Economic Times reported.
According to the report, the GST fitment committee, comprising officials from the Centre and states, has approved the proposal to eliminate the 12% and 28% slabs and shift to a simplified structure. A special 40% rate is being considered for sin goods and select luxury products.
“All the products used by the common man—from bicycles to food items, toiletries and apparel, medicines, to even movie tickets and hotels (with tariffs up to ₹7,500 per night)—will be at the lowest slab of 5%,” a senior official was quoted as saying in the report.
The move is expected to reduce the household tax burden by 12–15%.
The GST Council, chaired by Finance Minister Nirmala Sitharaman and including ministers from all states, will hold a two-day meeting to review the fitment panel’s detailed study and assess revenue impacts. The proposal may also end the compensation cess on items currently taxed at 28%.
A distinction may be drawn between essentials, aspirational products, and ultra-luxury goods based on price thresholds. Large industrial contracts may also be assessed separately.
India adopted the current 5%, 12%, 18%, and 28% GST structure in July 2017. A compensation cess ranging from 1% to 290% was added on luxury and demerit goods to offset state revenue losses.
A ₹3,000 crore surplus in the compensation fund is expected by the end of September and could be distributed between the Centre and states if approved.
