GoM Proposes to Lower GST Rates: Know What are Those?

Bihar Deputy Chief Minister Samrat Choudhary, who heads the six-member Group of Ministers (GoM) on GST rate rationalisation, mentioned that they have accepted the Centre’s revised proposal on GST rates and will submit it to the GST Council for final approval.

The GST Council, chaired by Union Finance Minister Smt. Nirmala Sitharaman and comprising finance ministers from all states, will have to approve the revised proposal. The Council is scheduled to meet on Sep 3rd or 4th for its 56th meeting.

A timeline has been outlined with the aim of rolling out the revised GST two-rate structure as a Diwali gift to the Indian public.

The proposal provided by the Central Government involves retaining only 5% and 18% as the main along with the lesser used GST rates of 3% and 0.25%. The 12% and 28% will be phased out.

Key Changes Expected

• Removal of the main slabs of 12% and 28%.

• Majority of the items taxed in the 12% bracket are expected move to 5% for example condensed milk, butter, ghee, dry fruits and nuts, jams, coconut water packaged, bhujia among few others.

• Majority of the items taxed in the 28% bracket are expected move to 18% for example caffeinated beverages, air conditioners, dish washers, bigger motor vehicles.

• There could be a possible reduction in rates of life and health insurance premium.

• There could be a 40% tax on sin-goods such as tobacco, pan masala and online gaming in relation to ‘The promotion and regulation of Online Gaming Act, 2025’.

• Smoother and quicker filing of returns.

The GoM has also emphasized the need for an impact assessment of potential revenue losses to the states, and to ensure appropriate compensation to the states—possibly through introduction of levy on select products.

The Government expects to implement this change to encourage and boost consumer spending across essential, normal, and aspirational goods.

While this move appears beneficial and may lead to lower prices for consumers and buyers, its actual impact will only become clear over time.

Further details will follow in the upcoming Council meeting.