ECONOMY
GST rationalisation and reduction plan moves closer, with GoM’s nod to slash rates
- IBJ Bureau
- Aug 22, 2025
A proposal to slash and simplify Goods and Services Tax (GST) reached a step further on Thursday, with a GST Group of Ministers (GoM) approving the plan to scrap the 12 and 28 per cent slabs. The proposal now goes to the GST Council for final consideration.
In his Independence Day address, Prime Minister Narendra Modi had announced rationalisation of the indirect tax regime.
Once the move is approved by the GST Council, only the 5 and 18 per cent slabs of the existing four will remain, apart from a 40 per cent slab that may be introduced for ultra-luxury goods.
The GST Council, which is led by Union Finance Minister Nirmala Sitharaman and has ministers from all States as members, will consider the feedback, including questions on the States’ share and compensation for loss of revenue.
“Everyone made suggestions over the proposals made by the Centre. Some States have a few observations. This has been referred to the GST Council,” said Bihar Deputy Chief Minister Samrat Choudhary, the convener of the GoM on Compensation Cess, Health and Life Insurance, and Rate Rationalisation, constituted by the GST Council.
Two specific concerns were raised by some States. They were related to constitution of an institutional mechanism to compensate States for revenue loss and whether the benefits from GST rate cuts would percolate down to the ultimate beneficiary – the common person.
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