GoM approves scrapping of 12%, 28% GST slabs; 90% goods may get cheaper

In a major step towards GST rate rationalisation, the Group of Ministers (GoM) has accepted the Centre’s proposal to merge the existing four-slab system into a simpler two-rate structure, a move that could make nearly 90% of goods cheaper.

The new framework proposes just two primary slabs–5% for merit goods and 18% for most standard items–while retaining a higher 40% levy on sin goods such as alcohol, tobacco, gambling, and sugary drinks.

Under this restructuring, almost all items currently taxed at 12% will shift to the 5% slab, while most goods in the 28% bracket will move down to 18%. Officials said this would significantly reduce compliance burdens and lower prices across a wide range of household products and services.

The GoM also examined a proposal to exempt GST on individual health and life insurance premiums. While most states supported the move, they cautioned that strict monitoring would be needed to ensure insurance companies pass on the benefit to customers. The exemption could cost the exchequer an estimated ₹9,700 crore annually.

The final decision on the new tax structure will be taken at the GST Council meeting scheduled for September.

(This story was taken from syndicated feed and was only edited for style by Gujarat Samachar Digital team)