New Delhi
The Centre has proposed a sweeping overhaul of the Goods and Services Tax (GST) structure, reducing the number of tax slabs while easing the burden on consumers. According to official sources, the proposal retains the 5% and 18% slabs, introduces a concessional rate below 1%, and sets a 40% “sin tax” on five to seven luxury or demerit goods.
Under the plan, the existing 12% and 28% brackets will be scrapped. Nearly 99% of items currently taxed at 12% will be moved to the 5% slab, while about 90% of goods and services in the 28% bracket will shift to 18%. No additional cess will be imposed beyond the revised GST rates.
Prime Minister Narendra Modi, during his Independence Day address from the Red Fort, described the changes as “next-generation GST reforms” and a “Deepavali gift” aimed at reducing the tax burden on the common man.
Officials acknowledged that the restructuring may initially impact government revenue, but said the loss would not significantly affect the fiscal deficit. “The expectation is that lower rates will spur consumption, curb tax evasion, and widen the tax base, ultimately boosting revenue by year-end,” a senior official said.
The Ministry of Finance confirmed in a press release that the proposal has been submitted to the Group of Ministers (GoM) set up by the GST Council to examine the issue of rate rationalisation.
