The planned GST overhaul seeks to simplify the tax regime with a two-tier structure of 5% and 18%, plus a 40% tax on sin goods. Though aimed at ease and clarity, it could heavily affect revenue for both the Centre and states.
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GoM backs two-tier GST structure of 5% and 18%, revenue impact under review
The Group of Ministers (GoM) on rate rationalisation, which convened in Delhi on August 20-21, has given its approval to the proposal of removing the 12% and 28% GST slabs. During the meeting, state finance ministers unanimously supported the idea of shifting towards a simplified two-tier structure with only 5% and 18% rates. According to officials, this change is aimed at making the GST system more transparent, predictable, and business-friendly, while also reducing complexities for taxpayers. However, the move may create significant revenue challenges for both the Centre and states, making compensation mechanisms a key point of discussion.
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PM Modi promises Next-Gen GST reforms by Diwali to ease tax burden and boost economy
These developments follow Prime Minister Narendra Modi’s Independence Day announcement, promising next-generation GST reforms by Diwali. “The government will bring Next-Generation GST reforms to reduce the tax burden on the common man.
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