Will FM Sitharaman Unveil a Simplified Two-Slab GST Structure?
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Synopsis
In a pivotal meeting, Finance Minister Nirmala Sitharaman is set to address the group of ministers regarding a proposed streamlined two-slab GST structure. This reform aims to enhance affordability for consumers and align with the Prime Minister's vision for next-gen GST reforms ahead of Diwali. Stay tuned for insights on this significant economic shift.
Key Takeaways
- Two-slab GST system: Proposed structure includes 5% and 18% rates.
- Consumer benefits: Aims to lower prices by removing higher slabs.
- Upcoming GST Council meeting: Scheduled for September 18-19.
- Leadership: Meeting led by Bihar's Deputy Chief Minister.
- Focus on demerit goods: 40% slab for specific harmful items.
New Delhi, Aug 20 (NationPress) Finance Minister Nirmala Sitharaman is scheduled to address a group of ministers (GoM) in a significant meeting on Wednesday, where crucial reforms regarding the Goods and Services Tax (GST) structure will be discussed.
The Finance Ministry has proposed a streamlined, two-tier Goods and Services Tax system featuring a "standard" slab and a "merit" slab, along with special rates for specific goods. The Centre aims for a simplified GST rate structure of 5 percent and 18 percent, while proposing a 40 percent special rate for certain demerit goods.
This proposal intends to eliminate the existing 12 percent and 28 percent slabs, aiming to reduce costs for consumers.
As per government sources, while the Centre is not part of the GoM, the Finance Minister’s insights at the two-day meeting will enhance the GoM's understanding of the government's rationale.
The meeting will be chaired by Bihar Deputy Chief Minister Samrat Choudhary, who leads the six-member panel expected to discuss the Union government's initiative to transition to a simplified two-slab GST structure.
The proposed framework will categorize goods into two main segments — ‘Merit’ goods (5 percent) aimed at benefiting the middle class, MSMEs, and farmers, and ‘Standard’ goods (18 percent) encompassing the majority of other goods and services.
The highest permissible slab of 40 percent will apply to around 5-7 demerit items, including pan masala, tobacco, and online gaming.
Approximately 99 percent of items currently under the 12 percent slab could transition to 5 percent following GST rate adjustments.
The GST Council is anticipated to convene on September 18-19 to finalize the proposal.
This initiative aligns with Prime Minister Narendra Modi’s Independence Day declaration of “next-gen GST reforms before Diwali,” built on three foundational pillars: structural reforms, rate rationalization, and improved living standards.
Point of View
It’s essential to view this initiative through a lens of optimism and practicality. The proposed two-slab GST system aims to simplify the tax structure, ultimately benefiting consumers and businesses alike. While the transition may pose challenges, the government's commitment to making goods more affordable is commendable. It's crucial that these reforms are implemented effectively and transparently to gain public trust.
NationPress
09/10/2025
Frequently Asked Questions
What is the new GST structure proposed?
The proposed GST structure includes a simplified two-tier system with a 'merit' slab at 5% and a 'standard' slab at 18%, along with a special rate of 40% for certain demerit goods.
When will the GST Council meet to finalize the proposal?
The GST Council is expected to convene on September 18-19 to finalize the proposed two-slab GST structure.
Who is leading the group of ministers meeting?
The meeting will be chaired by Bihar Deputy Chief Minister Samrat Choudhary, who is the convenor of the six-member panel.
How will these changes affect consumers?
The proposed changes aim to remove higher tax slabs, potentially making goods more affordable for consumers.
What items fall under the 40% slab?
Items such as pan masala, tobacco, and online gaming will fall under the 40% demerit goods slab.
