A major decision that could soon impact common people’s pockets is in the pipeline. The GST Council, formed by the Central Government, is preparing for a significant restructuring of the Goods and Services Tax (GST) slabs. According to a report by Hindustan Times, a proposal has been made to completely eliminate the 12% GST slab.
Current GST Structure
India currently has four GST tax slabs: 5%, 12%, 18%, and 28%. Now, the plan is to simplify the system into three slabs, which would not only make tax administration easier but also help maintain revenue neutrality for the government.
What’s the Proposal?
As per the report, officials and experts in the Group of Ministers (GoM) are in agreement that the 12% tax slab is no longer necessary. The removal of this slab is being considered part of a larger tax rationalisation move. However, the final decision will be taken in the upcoming GST Council meeting.
If the 12% slab is removed, all goods and services currently taxed at 12% will either move to the 5% slab (making them cheaper) or to the 18% slab (making them costlier).
Key Items Currently in the 12% GST Slab
Here are some products and services that currently fall under the 12% category:
- Packaged and processed food items: butter, ghee, cheese, fruit juices, jams, savouries
- Dry fruits and nuts: almonds, dates
- Household items: umbrellas, wooden or cane furniture
- Stationery and accessories: pencils, crayons, jute and cotton bags
- Footwear priced below ₹1,000
- Diagnostic kits and building materials like marble and granite
- Hotel services with room tariffs up to ₹7,500 per day
- Air travel (non-economy class)
- Certain construction services
- Multimodal transport and professional services
Products that move to the 5% slab will become more affordable, while those shifted to 18% will see a price rise.
Also Read-: GST Council Likely to Consider 4 Options for Relief on Health Insurance
When Will the GST Council Take a Decision?
The GST Council is expected to discuss this issue in its next meeting, which is likely to be held in late June or early July. With the Monsoon Session of Parliament starting on 21 July, the decision may be finalised before that. However, the report notes that the GoM’s final recommendations have not yet been submitted to the Council, and no formal proposal for rate changes has been made so far.
How Will This Affect the Common Man?
If the proposal gets approved, it will directly impact household budgets.
- Items shifting from 12% to 5%, such as packaged food and stationery, will become cheaper.
- Items moving to 18%, like hotel stays and air travel, will become more expensive.
In summary, while the move is expected to simplify the GST system, its actual effect will depend on which products move to which tax slab.