The Centre has proposed reforms in GST by reducing the number of slabs under Goods and Services Tax (GST) to 2 (5 and 18 per cent) from 4 (5, 12, 18, and 28 per cent).
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A crucial meeting of the GoM of State finance ministers on GST rate rationalisation began on Thursday as they started deliberation on the Centre’s proposal to reduce tax slabs to 5 and 18 per cent.
The 6-member Group of Ministers (GoM) on rate rationalisation is chaired by Bihar Deputy Chief Minister Samrat Choudhary.
The other members are Uttar Pradesh Finance Minister Suresh Kumar Khanna, Rajasthan Health Minister Gajendra Singh, West Bengal Finance Minister Chandrima Bhattacharya, Karnataka Revenue Minister Krishna Byre Gowda and Kerala Finance Minister K N Balagopal.
The Centre has proposed reforms in GST by reducing the number of slabs under Goods and Services Tax (GST) to 2 (5 and 18 per cent) from 4 (5, 12, 18, and 28 per cent).
“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,” Finance Minister Nirmala Sitharaman had told the Group of Ministers (GoMs) constituted by the GST Council on Compensation Cess, Health & Life Insurance, and Rate Rationalisation on Wednesday.
Thereafter, the GoM on insurance met on Wednesday evening and discussed the Centre’s proposal to exempt GST on health and life insurance policies for individuals. The proposal is likely to have a revenue impact of ₹9,700 crore per year, however, most states were on board.
The States also stressed that the GST Council should devise a mechanism to ensure that the GST cut benefits reach policyholders.
The GoM on rate rationalisation in its meeting on Thursday will discuss 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 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.
Published on August 21, 2025