Quick Summary
AGroup of Ministers (GoM) has approved in principle the Union government's proposal to reduce the number of Goods and Services Tax (GST) brackets from four to two. The move, aimed at reducing the tax burden on consumers and streamlining compliance, is being seen as a potential precursor to "GST 2.0.
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FAQ :
The proposal aims to reduce the number of GST tax slabs from the current four to just two main rates (5% and 18%), with a new 40% slab for luxury and sin goods, and eliminating the 12% and 28% slabs.
The 12% and 28% GST tax slabs are proposed to be eliminated.
The proposed main GST rates are 5% and 18%, with a new 40% rate introduced for luxury and sin goods.
The reform is expected to make the tax system easier to understand and implement, reduce tax burdens on consumers, streamline compliance, and potentially boost consumption.
Some states have raised concerns about potential revenue losses, with estimates suggesting an annual shortfall of up to Rs 85,000 crore.
The GoM's recommendations will be presented to the GST Council, which is the final decision-making body, to weigh the benefits against revenue implications before giving approval.
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