Nirmala Sitharaman to Present GST Rate Cut Proposal to GoM
Finance Minister Nirmala Sitharaman is set to address a two-day Group of Ministers (GoM) meeting starting August 20 in New Delhi. She will review the Centre’s proposal for a sweeping overhaul of India’s GST structure, which includes rationalising rates and simplifying tax slabs.
Simplified GST Structure Proposed
The government has proposed a leaner GST framework featuring two main tax rates—5% and 18%—while phasing out the existing 12% and 28% slabs. In addition, a special 40% rate is planned for a small category of luxury and sin goods, such as tobacco. This proposal aims to make the tax system more transparent and reduce the burden on essential items.
Revenue Impact and Consumer Benefits
Under the revised model, the 18% rate is expected to remain the largest revenue contributor, accounting for around 65% of total collections. Nearly all items currently taxed at 12% are being considered for the 5% bracket, while over 90% of items in the 28% bracket may drop to 18%. Analysts suggest that this can boost consumption, improve affordability, and spur economic activity just in time for Diwali.
Roadmap to Implementation
Following the GoM’s review, the GST Council will likely convene in September to finalise the reform package. The aim is to bring these changes into effect by October, offering tax relief as a festive-season benefit to consumers and businesses.
