GST Rate Cut on Common Goods Likely, Centre Considers Scrapping 12% Slab: Sources
In a move that could bring significant financial relief to millions of households, the central government is actively considering a major restructuring of the Goods and Services Tax (GST) rates, with a focus on lowering the tax burden on everyday items, highly-placed sources said.
The core of the proposal involves a significant change to the 12% GST slab, which currently includes a wide range of goods commonly used by middle- and lower-income families. The government is weighing two primary options: either shifting these essential items to the lower 5% tax bracket or eliminating the 12% slab entirely.
This potential overhaul aims to make numerous daily-use products cheaper, thereby easing the inflationary pressure felt by a large section of the population. According to sources, a final decision on this politically significant measure is anticipated at the 56th meeting of the GST Council, which is expected to be convened later this month.
The discussions gain further momentum following recent remarks from Finance Minister Nirmala Sitharaman, who hinted that GST rates are expected to be simplified and reduced. This has intensified speculation that a rate rationalization is imminent.
The GST Council, which is the apex decision-making body for the indirect tax regime and is chaired by the Union Finance Minister with state finance ministers as members, will take the final call. While a formal 15-day notice is required to call a Council meeting, preparations are reportedly underway for the session to be held soon.
If the proposal is approved, it would represent one of the most substantial changes to the GST structure since its implementation on July 1, 2017. The move is seen as a direct attempt to address the rising cost of living and provide tangible benefits to ordinary citizens, especially in a pre-election year. The current GST regime has four main slabs: 5%, 12%, 18%, and 28%.
