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India Today
2 days ago
- Business
- India Today
GST Council may remove 12% slab, shift items to 5% and 18%: Report
The Goods and Services Tax (GST) Council, which includes the Union Finance Minister and Finance Ministers from all states, may decide on the elimination of the 12% tax slab, reported Hindustan move is part of a broader strategy to simplify the GST rate structure, reducing the existing four slabs to three. The report indicated that the proposal has garnered backing from officials and experts involved with the Group of Ministers (GoM) on rate changes, achieving a "near consensus."advertisementA source quoted in the report said, 'This could be the most plausible way to undertake a revenue neutral tax rate rationalisation exercise. However, the GST Council has to take a final call.'Impact on goods and services Currently, the 12% tax slab encompasses a variety of goods, including condensed milk, caviar, 20-litre drinking water bottles, walkie-talkies, and contact items such as sausages, frozen vegetables, pasta, and various household goods also fall under this category. Services taxed at 12% comprise specific construction projects, hotel accommodations priced up to 7,500 per day, and non-economy air travel. The shift of these goods and services to either the 5% or 18% tax brackets is expected to streamline tax filings and classifications, enhancing compliance GST Council meetingThe GST Council's forthcoming meeting, anticipated to occur in June or July, is likely to focus on rationalising rates and alleviating compliance council's last meeting was held in December Mani, Partner at BDO India, highlighted the importance of this meeting, amd said, 'One of the key expectations from the 56th meeting of the GST Council is the decision on rate rationalisation on various goods and services.'The Group of Ministers on rate changes was established on 24th September 2021, following a GST Council meeting in Lucknow. Initially led by Basavaraj S Bommai, the group is currently chaired by Bihar Deputy Chief Minister Samrat proposal to remove the 12% slab has largely been accepted by Union and state officials, tax experts, and GoM members. This initiative is seen as a step towards achieving a more straightforward and effective GST Watch
Mint
2 days ago
- Business
- Mint
GST Council may eliminate 12% tax slab, to shift items to 5% and 18% rates: Report
The GST Council may soon consider a plan to rationalise the goods and services tax rates, reducing them from four to three by eliminating the 12 per cent tax slab, according to a report by the Hindustan Times, citing people aware of the development. The officials and experts advising the Group of Ministers (GoM) over rate rationalisation have reached a 'near consensus' that the current 12 per cent tax slab does not hold much relevance now and the items falling under this could be shifted to either 5 per cent or 18 per cent slab. 'This could be the most plausible way to undertake a revenue neutral tax rate rationalisation exercise. However, the GST Council has to take a final call,' the report quoted a person aware of the development. The proposal to remove 12 per cent tax slab has been supported by most Union and state government officials, experts and GoM representatives, it said. Presently, there are four tax slabs under the GST regime in India – 5 per cent, 12 per cent, 18 per cent and 28 per cent. Under the 12 per cent tax slabs goods such as such as condensed milk, caviar and caviar substitutes prepared from fish eggs, drinking water packed in 20 litre bottles, walkie talkies, tanks and other armoured fighting vehicles, contact lenses, cheese, dates and dried fruits, frozen vegetables, sausages and similar meat products, pasta, jams and jellies, fruit juice-based drinks, namkeens including bhujiya, curry paste, mayonnaise, tooth powder, feeding bottles, carpets, umbrellas, caps, bicycles, specific household utensils, furniture made of cane or wood, pencils and crayons, handbags and shopping bags made of jute or cotton, footwear priced lower than ₹ 1,000, diagnostic kits, and marble and granite blocks are currently included. Meanwhile services such as specified construction work, hotel rooms up to ₹ 7,500 per day, transport of passengers by air in non- economy classes, some types of multimodal transportation, and certain professional, technical and business services are included in the 12 per cent tax slab. The GST Council is expected to meet either in June or July. The apex decision-making body under the indirect tax regime comprises the Union Finance Minister and Finance Ministers (or senior ministers) of states. The Council last met in December 2024 and is expected to discuss proposals related to rate rationalisation and other issues, including the ease of compliance, the report said. The GoM on rate rationalisation was formed on September 24, 2021, after the decision of the 45th GST Council meeting in Lucknow. Its first convenor was convener was former Karnataka CM Basavaraj S Bommai. In November 2023, it was convened by UP Finance Minister Suresh Kumar Khanna. Subsequently, on February 27, 2024, Samrat Chaudhary, the deputy CM of Bihar, took on the role of convener.
Hindustan Times
2 days ago
- Business
- Hindustan Times
GST Council may take up removal of 12% rate
The GST Council could discuss, at its next meeting, a proposal to rationalise Goods and Services Tax (GST) rates by reducing the number of slabs from the current four to three by removing the 12% tax slab, people familiar with the matter said, asking not to be named. There is a 'near consensus' among officials and experts advising the Group of Ministers (GoM) discussing rate rationalisation that the 12% slab has little continued relevance, and essential items used by common people could be placed in preceding slab of 5% and rest could be shifted to the next 18% slab, the people added. 'This could be the most plausible way to undertake a revenue neutral tax rate rationalisation exercise. However, the GST Council has to take a final call,' one of the people said. The GST Council, which is the apex decision-making body on indirect tax regime, is expected to meet either in June-end or July. The body, comprising the Union finance minister and finance ministers (or senior ministers) of states, has not met since December 2024 and will likely consider proposals related to the rate rationalisation along with other issues, including further ease of compliance, the people cited above said. The GoM on rate rationalisation was first constituted on September 24, 2021 as per the decision of the 45th GST Council meeting held in Lucknow with the mandate of rate rationalisation, simplification of tax structure and correcting duty inversions. At first ,its convener was former Karnataka CM Basavaraj S Bommai. Later, in November 2023, the convenorship went to UP finance minister Suresh Kumar Khanna. After that Bihar deputy CM Samrat Chaudhary became its convener on February 27, 2024. The decision to do away with the 12% slab is endorsed by most Union and state government officials, experts and GoM representatives , the first person added. Currently, India has a four-slab GST regime – 5%, 12%, 18% and 28%, broadly following the principle of lower tax on necessities and higher tax on luxury items. The poor are protected with zero tax on essentials such as unpacked food items, salt, milk, fresh vegetables, educational and health services. The 12% tax slab includes items such as condensed milk, caviar and caviar substitutes prepared from fish eggs, drinking water packed in 20 litre bottles, walkie talkies, tanks and other armoured fighting vehicles, contact lenses, cheese, dates and dried fruits, frozen vegetables, sausages and similar meat products, pasta, jams and jellies, fruit juice-based drinks, namkeens including bhujiya, curry paste, mayonnaise, tooth powder, feeding bottles, carpets, umbrellas, caps, bicycles, specific household utensils, furniture made of cane or wood, pencils and crayons, handbags and shopping bags made of jute or cotton, footwear priced lower than ₹1,000, diagnostic kits, and marble and granite blocks. Services attracting 12% GST include specified construction work,hotel rooms up to ₹7,500 per day, transport of passengers by air —with or without accompanied belongings -- in non- economy classes, certain types of multimodal transportation, and specific professional, technical and business services. Experts welcomed the idea of scrapping the 12% slab. Saurabh Agarwal, tax partner at consultancy firm EY India said: 'The upcoming GST Council meeting will focus on rate rationalisation, with indications that the Council may eliminate the 12% slab in favour of a simplified three-rate GST structure. This change could enhance compliance, reduce classification disputes, and improve efficiency.' Agarwal added that the exercise will require balance, because revenue neutrality (the changes not having any impact on the overall tax revenue) is key. 'Revenue neutrality is essential, as the 12% slab currently includes mass-consumption goods and industrial inputs. Transitioning these to the 5% or 18% slabs will have varied revenue implications, requiring careful assessment to maintain accessibility. The inflationary impact is also a concern. Moving items from the 12% to the 18% slab could raise costs for semi-essential goods, potentially burdening consumers. A phased approach is necessary to mitigate price increases.' Additionally, classification challenges may arise during the transition, leading to interpretational issues for businesses, Agarwal said. 'Clear guidelines will be crucial to ensure a smooth shift. Aligning with global practices, many advanced GST/VAT regimes use one or two standard rates. Thus, adopting a three-rate structure would bring India closer to these standards while allowing for socio-economic flexibility,' he said. 'In summary, while a simplified GST structure is promising, its success will depend on careful design and stakeholder consultation.' According to experts, continued growth in gross GST revenues supports the need for rate rationalisation. Gross GST revenues saw over 9% jump to ₹22,08,861 crore in 2024-25 as compared to ₹20,18,249 crore in 2023-24. The new financial year saw record collection in the month of April this year at ₹2,36,716 crore. The revenue in the next month (May 2025) also was the third highest ever at ₹2,01,050 crore.
