GST council meeting: The government is considering removing the 12% and 28% GST slabs and merging the items in that category between the 5% and 18% categories. The government also intends to rationalise the rates of health and life insurance.
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GST council meeting: The GST Council is likely to hold a two-day meeting in the month of September. The meeting is expected to focus on major changes including the removal of 12% and 28% GST slabs, rationalization of health and life insurance rates, as well as adjustments in tax slabs on essential commodities.
According to government sources, there is a plan to abolish the current 12% and 28% slabs of GST. Only two slabs – 5% and 18% – will be proposed in the meeting. The merging of the 12% and 28% slabs in these two categories will be considered. Sources say that the aim is to make essential services including health and life insurance more affordable, as well as reduce taxes on products used in daily life.
40 percent rate also
At the same time, a special rate of 40 percent has been proposed for luxury and harmful goods. Now the group of ministers will discuss this proposal and on that basis will put its recommendation before the GST Council. At present, zero percent GST is levied on essential food items, while five percent GST is levied on daily use items, 12 percent on standard goods, 18 percent on electronics products and services and 28 percent GST is levied on luxury and harmful goods. Sources said that in this revised format, which is ready to replace the existing indirect tax system by Diwali this year, only two tax rates of five percent and 18 percent have been proposed.
What did PM Modi say?
Prime Minister Narendra Modi has announced a plan to bring about a major change in the GST system in his Independence Day speech. In his address on the occasion of the 79th Independence Day, Prime Minister Modi said that the next generation GST reforms will be implemented by Diwali, which will significantly reduce the tax burden and benefit small industries.
Centre proposes to scrap the current slab of 12% and 28% of GST, proposes two rates of structure: 5% and 18% : Govt Sources pic.twitter.com/P7ugrmPFqm
— ANI (@ANI) August 15, 2025
What did the Finance Ministry say?
After PM Modi’s speech, the Finance Ministry said – The GST Council will discuss the recommendations of the GoM in its next meeting and every effort will be made to implement them soon. The proposal states that structural reforms will help increase confidence in the industry and support better business planning.
The ministry said that the abolition of compensation cess has created fiscal space, which has provided an opportunity to rationalize tax rates within the GST structure for long-term stability. A broad consensus will be built with the states in the coming weeks to implement tax reforms. Let us tell you that Bihar Deputy Chief Minister Samrat Choudhary is the convener of the seven-member Group of Ministers (GoM) constituted to rationalize GST rates.
GST Tax Structure
In the current four-tier tax structure of GST, essential goods are not taxed or they are placed in the lower tax slab. In contrast, the highest rate is applicable on harmful and luxury goods. Compensation cess has also been imposed on some goods. The compensation cess scheme is ending on March 31, 2026.
