GST slabs likely to be overhauled soon; PMO gives in-principle nod

India’s Goods and Services Tax (GST) regime is likely to see a major overhaul after eight years, with the Prime Minister’s Office giving in-principle approval for structural reforms. The GST Council is expected to take a final decision on the changes during its upcoming meeting in August. The Finance Ministry has already begun internal deliberations and is holding consultations with state governments to build consensus.

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Currently, there are five GST slabs: 0%, 5%, 12%, 18%, and 28%. The proposal under consideration seeks to eliminate the 12% slab altogether. Products falling under the 12% rate, which account for nearly 19% of all items, would be redistributed between the 5% and 18% slabs depending on their nature. The government believes this move would simplify the tax system for both businesses and consumers while improving administrative efficiency.

Officials say that with India’s economic conditions now more stable, the timing is right for rationalising GST rates. The objective is to create a streamlined and business-friendly tax system that also prepares India for future global trade alignments.

The move comes after repeated demands from trade bodies, industry leaders, and political parties for revisiting GST rates and reducing compliance burdens, especially on small and medium enterprises.