• 21 Aug 2025 06:39 PM
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GST rejig: Group of Ministers accepts Centre's rate rationalisation proposal to scrap 12% and 28% slabs

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GST rejig: Group of Ministers accepts the Centre's rate rationalisation proposal, which includes consolidating the slabs into two — 5 per cent and 18 per cent, and scrapping the 12 per cent and 28 per cent slab rates.

GST rate rejig: The six-member Group of Ministers (GoM) on goods and services tax (GST) rate rationalisation has accepted the Centre's proposal to scrap 12 per cent and 28 per cent slabs, and consolidate the tax into two slabs of 5 per cent and 18 per cent, Bihar Deputy Chief Minister Samrat Choudhary told the media on August 21.

Further, speaking to the media, West Bengal Finance Minister Chandrima Bhattacharya said that ultra-luxury cars should attract a levy on top of the 40 per cent GST rate.

The GoM, chaired by Choudhary, met Union Finance Minister Nirmala Sitharaman on Thursday to discuss her ministry's proposals on GST rates. The proposals were shared on India's 79th Independence Day on August 15, 2025; and was also spoken about by Prime Minister Narendra Modi during his speech at the Red Fort.

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GST rate rationalisation: What has been decided so far?

"Everyone made suggestions over the proposals made by the Centre. Some states have a few observations. This has been referred to the GST Council. The Council will make a decision. The proposal by the central government, of ending two slabs, was deliberated on and supported. We have made recommendations," Choudhary told reporters outside the Parliament.

The minister added that the GST Council will make a decision over the rates, adding, "We have supported the two proposals by the Government of India, of scrapping GST slabs of 12 per cent and 28 per cent."

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Watch: Bihar DyCM Samrat Choudhary says 'We have supported the two proposals'

GoM agenda: Discussion on Centre's GST rate cut proposal

Addressing the GoM constituted by the GST Council on Compensation Cess, Health & Life Insurance, and Rate Rationalisation on August 20, Sitharaman said, "The rate rationalisation will provide greater relief to the common man, farmers, the middle class and MSMEs, while ensuring a simplified, transparent and growth-oriented tax regime."

On the GoM's agenda was a discussion on: 

  • The Centre's proposal of classifying goods and services as 'merit' and 'standard' and levying 5 and 18 per cent rates. 
  • Besides, a special 40 per cent rate has been proposed on 5-7 items, including sin goods. 
  • The Centre's proposal also entails eliminating the 12 and 28 per cent slabs, with 99 per cent of items in the 12 per cent bracket being reclassified to 5 per cent and 90 per cent in the 28 per cent slab coming down to 18 per cent.

Apart from Choudhary and Bhattacharya, other members of the GoM are Uttar Pradesh Finance Minister Suresh Kumar Khanna, Rajasthan Health Minister Gajendra Singh, Karnataka Revenue Minister Krishna Byre Gowda, and Kerala Finance Minister KN Balagopal.