Will FM Sitharaman Discuss a Simplified 2-Slab GST Structure with GoM?
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Synopsis
In an important meeting set for Wednesday, Finance Minister Nirmala Sitharaman will address the group of ministers regarding significant reforms to the Goods and Services Tax (GST) structure. The proposed two-slab system aims to simplify rates and reduce consumer costs, aligning with the government's goal of enhancing living standards.
Key Takeaways
- Two-slab GST system proposed: 5% and 18% rates.
- 40% special rate for demerit goods like tobacco.
- The aim is to reduce costs for consumers.
- Expected GST Council meeting on September 18-19.
- Aligned with PM Modi’s vision for next-gen reforms.
New Delhi, Aug 20 (NationPress) Finance Minister Nirmala Sitharaman is scheduled to address a group of ministers (GoM) during a crucial meeting on Wednesday, focusing on forthcoming reforms to the Goods and Services Tax (GST) framework.
The Finance Ministry has proposed a streamlined, two-tier GST system that features a "standard" slab and a "merit" slab, along with specific rates for select items. The Centre has recommended a straightforward two-tier GST structure of 5 percent and 18 percent, while retaining a 40 percent special rate for certain demerit goods.
This initiative aims to eliminate the existing 12 percent and 28 percent slabs, with the goal of reducing costs for consumers.
As per government sources, although the Centre is not part of the GoM, the Finance Minister’s input at the two-day GoM meeting will offer valuable insights into the government's approach.
The meeting, led by Bihar Deputy Chief Minister Samrat Choudhary, who convenes the six-member panel, is anticipated to assess the Union government’s strategy for adopting a simplified two-slab GST structure.
The suggested framework categorizes goods into two main groups — ‘Merit’ goods (5 percent), aimed at supporting the middle class, MSMEs, and farmers, and ‘Standard’ goods (18 percent), which encompass most other goods and services.
The highest allowable slab of 40 percent will be designated for approximately 5-7 demerit items, including pan masala, tobacco, and online gaming.
Almost 99 percent of items currently classified under the 12 percent slab could transition to 5 percent once the GST rate adjustments are implemented.
The GST Council is likely to convene on September 18-19 to make a definitive decision on the proposal.
This government initiative aligns with Prime Minister Narendra Modi’s Independence Day declaration of “next-gen GST reforms before Diwali” and is grounded in three core principles: structural reforms, rate rationalization, and enhancing ease of living.
Point of View
It is crucial to recognize the government's efforts in restructuring the GST. Simplifying the tax framework through a two-slab system could potentially ease the financial burden on consumers and promote growth within various sectors. It reflects a strategic approach towards enhancing the ease of living in the country.
NationPress
07/10/2025
Frequently Asked Questions
What is the proposed GST structure?
The proposed structure includes a simplified two-tier system with slabs of 5% and 18%, along with a special 40% rate for certain demerit goods.
When will the GST Council meet to decide?
The GST Council is expected to meet on September 18-19 to finalize the proposal.
What are 'Merit' and 'Standard' goods?
'Merit' goods, taxed at 5%, benefit the middle class, MSMEs, and farmers, while 'Standard' goods, taxed at 18%, cover most other goods and services.
Why is this proposal significant?
This proposal aims to simplify the tax structure, making goods cheaper for consumers, and is part of a broader initiative to enhance living standards.
Who is leading the GoM meeting?
The meeting is being led by Bihar Deputy Chief Minister Samrat Choudhary, who is the convenor of the six-member panel.
