GST Council may consider merging the 12% and 18% tax slab in the next meeting, says Finance Minister Nirmala Sitharaman

12-Feb-2021 Business Insider India GST Council, GST, Goods And Service Tax, Finance Commission, Central GST 212 Views

  • In an interview with The Economic Times, the finance minister said that the GST council would examine the recommendations of reducing four tax slabs to three.
  • This has been a long-standing demand from the industry, which the 15th Finance Commission report included in its recommendations.
  • The proposal is to reduce GST slabs from the current four i.e. 5%, 12%, 18%, and 28%, to three slabs with the rates of 8%, 18%, and 28%.
  • Read on to know which products are likely to be affected after GST slab merger.

The Goods and Services Tax (GST) Council may choose to consider the proposal to reduce the number of tax slabs to three.

Current GST slabs Proposed GST slabs
5% Merge to 8% tax slab
12% Merge to 8% tax slab
18% 18%
28% 28%

This is a long-standing demand from the industry, which the 15th Finance Commission — a body that defines financial aspects of the relationship between the Central government and the states — has agreed with. "We will definitely be talking about it. Whenever the council finds it fit. Sooner, I suppose. Whether it will be in the next meeting itself, I can't speak for the council as yet. We'll have to see," Finance Minister Nirmala Sitharaman said in an interview with The Economic Times.

The impact on the consumer will depend on the Council’s decision but reducing the tax rate will make the GST regime simpler for the states and, the government would hope, improve compliance.

These are some of the products that are likely to be affected after GST slab merger:

Goods under 12% GST Goods under 18% GST
Mobile phones Household products, including hair oil, toothpaste, shampoo
Frozen meat Pasta
Butter Pastries
Ghee furniture
Beverages TVs
Sauces, ketchup, and mustard sauce, Aluminum foil
Branded Cereals Optical fiber
Air travel tickets Power Banks
Railway coaches Shopping bags and handbags

 

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