What changes are being made to the GST structure in India?

The Indian government is proposing to simplify the GST structure by scrapping the 12% and 18% slabs, shifting most items to 5% and 18% rates.

How will the new GST rates impact consumers in India?

The new GST structure is expected to make everyday goods and services more affordable for Indian consumers, as many items previously taxed at 12% will now be taxed at 5%.

What is the impact of the GST reforms on the Indian economy?

Experts believe the GST simplification will boost demand and consumption, particularly in sectors like fast-moving consumer goods, consumer durables, and automobiles, giving the Indian economy a positive push ahead of the festive season.

Home / Business and Economy / India Streamlines GST, Slashing Rates on Everyday Goods Ahead of Festive Season

India Streamlines GST, Slashing Rates on Everyday Goods Ahead of Festive Season

21 Aug

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Summary

Proposal to simplify India's indirect tax system
Scrapping of 12% and 18% GST slabs, shifting most items to 5% and 18%
Sin goods and luxury vehicles to face new 40% slab

India Streamlines GST, Slashing Rates on Everyday Goods Ahead of Festive Season

In a move to simplify India's indirect tax system, a top panel of state ministers has approved a proposal to overhaul the Goods and Services Tax (GST) structure. As of 2025-08-21T19:05:24+00:00, the GST is currently applied in four slabs - 5%, 12%, 18%, and 28%, with an additional cess on luxury and sin goods.

The plan endorsed by the ministerial panel involves scrapping the 12% and 18% slabs. Most items in the 12% slab, such as insulin, condensed milk, and kitchenware, will now be taxed at 5%. Meanwhile, products previously in the 28% slab, including some automobiles, will shift to an 18% rate.

However, sin goods and 'super luxury vehicles' may face a new 40% slab. While the cess on the 28% slab will be removed, discussions are ongoing to introduce a new duty on sin goods like tobacco to maintain the overall tax incidence.

Experts believe this reform will boost demand and consumption, making everyday goods and services more affordable for consumers. Businesses, too, are expected to benefit from the simpler tax structure, which will reduce disputes and ease compliance.

The state ministers have expressed their support for the new regime, stating that it is in the interest of the common man. While the revenue impact is yet to be quantified, the ministers have emphasized that the focus is on consumer-friendly measures.

The GST Council will now decide on the ministerial group's recommendations, which are expected to be implemented before the upcoming festive season.

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