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GST restructuration
August 18 , 2025
16 hrs 0 min
22
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- The Finance Ministry has proposed a simplified two-tier GST system with “standard” and “merit” slabs.
- Special rates will be maintained for select goods outside the two primary slabs.
- There are plans to reduce GST on common household and aspirational goods to boost affordability and consumption.
- The end of the compensation cess has created fiscal space for rate rationalisation.
- The proposal aims to correct inverted duty structures to reduce the accumulation of input tax credit.
- The current four-tier system is 5%, 12%, 18%, and 28%.
- Only 5% and 18% slabs will be retained.
- It would entail entirely doing away with the 12% and 28% tax brackets.
- A lower concessional rate below 1% and a high “sin rate” of 40% on just five to seven items each will be introduced.
- 99% of items currently in the 12% slab will be moved to the 5% rate and 90% of goods and services in the 28% bracket will move to 18%.
- There will be no cess of any kind over and above the GST rates.
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