“GST Shake-Up: Govt Pushes for 5% and 18% Slabs, Eyes Simplification”

India may soon see a leaner version of the Goods and Services Tax (GST). The Finance Ministry has proposed trimming the current multi-slab structure to just two rates – 5% and 18% – in a move pitched as one of the biggest tax reforms since GST’s rollout in 2017.

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Why the Change?

Right now, GST has several slabs, which often leave businesses confused about how to classify products and services. The government feels the system has become too complicated. By simplifying it into two broad categories, officials hope to make compliance easier and disputes fewer.

Daily-use items and essentials would likely be taxed at 5%, while most other goods and services would move into the 18% bracket. Items considered luxury or harmful, such as tobacco, could still attract higher charges, while some basics may continue to stay exempt.

The Bigger Picture

Officials say the plan is not just about cutting paperwork. Reducing slab complexity could improve tax efficiency, make pricing more predictable, and help both consumers and companies. With fewer grey areas, businesses may spend less time on compliance and more on operations.

The Centre also has some financial breathing room. With the compensation cess being gradually phased out, states are less dependent on GST shortfalls being covered. This has opened space to push through reform without major revenue shocks.

Festive Timing and Political Angle

The timing is worth noting. If approved, the model could be rolled out around the festive season. That would give the government both visibility and goodwill, as consumers may associate the move with lower costs and easier billing.

A Step Towards One Nation, One Rate

Although the immediate focus is two slabs, the government is already hinting at a long-term goal – a single GST rate by 2047. Officials describe the present proposal as a stepping stone. It balances the need for simplicity while ensuring state revenues are protected.

Next Steps

The draft is now with the Group of Ministers (GoM). The GST Council will take the final call, but momentum seems to be building. If cleared, the change could mark one of the sharpest shifts in India’s indirect tax journey since 2017.

Conclusion

The proposed two-slab GST framework could reshape how India’s tax system works. With only 5% and 18% rates covering most items, businesses may find compliance easier, while consumers may benefit from clearer pricing.