GST Council May Finalise Two-Slab Structure in September-October Meeting - Major Reforms on Cards
The GST Council is expected to meet in September or October to deliberate on sweeping reforms aimed at simplifying India's indirect tax regime. The Centre has proposed a new two-rate structure of 5% and 18%, along with a 40% levy on sin goods such as tobacco and pan masala, replacing the existing multiple slabs.
Key Rate Rationalisation Plan
Under the blueprint, almost 99% of goods currently taxed at 12% would move to the 5% slab, while nearly 90% of items in the 28% slab, including aspirational consumer durables like televisions and refrigerators would shift to the 18% category. Exemptions and NIL GST rates on essentials will remain, as will marginal rates on bullion, jewellery and certain export-driven sectors.
Officials said the plan is designed to reduce tax burden on common-use items, enhance consumption and create a more predictable tax framework. "The common use and daily use items will be in the 5% GST rate, while aspirational middle-class goods will fall under 18%," an official explained.
Boost to Economy and Key Sectors
Announced by Prime Minister Narendra Modi during his Independence Day address, the reforms are expected to be implemented by Diwali if a consensus is reached. Lower rates on essential items could give a strong push to consumption and GDP growth, while structural corrections would benefit agriculture, textiles, fertilisers, renewable energy, automotives, handicrafts and insurance.
Compliance Reforms: Faster Registrations & Refunds
In addition to rate changes, the Centre has proposed:
- GST registration within 3 days for 95% of cases.
- Automated refunds for exporters and sectors facing inverted duty issues.
- Pre-filled tax returns to cut invoice mismatches.
- Simplified classification of goods to reduce litigation.
Implementation Timeline
The Group of Ministers on rate rationalisation will first review the proposal before it is tabled before the GST Council. If approved, the reforms could roll out by the third quarter of FY25 without requiring legislative amendments, as changes can be notified directly.
If implemented, this would mark the most significant overhaul of GST since its rollout in July 2017, making the system simpler, business-friendly, and growth-oriented.
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