The Goods and Services Tax (GST) Council—comprising the Union Finance Minister and finance ministers of all states—may soon decide to eliminate the 12% GST slab, according to a report by a news agency.
This move is aimed at simplifying the tax structure by reducing the existing four slabs (5%, 12%, 18%, and 28%) to three.
The proposed restructuring of GST slabs has received substantial support from the Group of Ministers (GoM) on rate changes, which includes both central and state tax officials.
A source quoted in the report said, “This could be the most plausible way to undertake a revenue neutral tax rate rationalisation exercise. However, the GST Council has to take a final call.”
This restructuring effort is being seen as a major step toward simplifying compliance and making the tax system more efficient for businesses and consumers alike.
Goods:
Condensed milk
Caviar
20-litre drinking water bottles
Walkie-talkies
Contact lenses
Sausages
Frozen vegetables
Pasta
Several household goods
Services:
Specific construction services
Hotel stays priced up to ₹7,500 per day
Non-economy class air travel
These items could soon be redistributed into the 5% or 18% tax categories, depending on their nature and economic impact.
The next GST Council meeting is expected to take place in June or July 2025, with rate rationalisation likely to top the agenda. The last council meeting was held in December 2024.
Karthik Mani, Partner at BDO India, highlighted the importance of this meeting, and said, “One of the key expectations from the 56th meeting of the GST Council is the decision on rate rationalisation on various goods and services.”
The Group of Ministers (GoM) on rate rationalisation, which was constituted on 24 September 2021 in Lucknow, is currently chaired by Bihar Deputy Chief Minister Samrat Chaudhary. Initially, the group was led by Basavaraj S Bommai.
The proposal to eliminate the 12% slab has received broad backing from:
Union and state government officials
Members of the Group of Ministers
Tax experts and policy analysts
This change aligns with India’s long-standing goal of creating a streamlined and revenue-neutral GST system. If implemented, this could mark one of the most significant tax reforms since the GST was introduced in 2017.
The proposed elimination of the 12% GST slab marks a critical step toward simplifying India’s tax regime. By redistributing goods and services to the 5% and 18% brackets, the GST Council aims to reduce ambiguity, ease compliance, and streamline tax filings for businesses and consumers alike.
The near consensus among the Group of Ministers and backing from tax experts indicate strong momentum for this reform. If approved, this move could pave the way for a more efficient, transparent, and revenue-neutral GST structure—making it easier for industries to operate and for authorities to enforce compliance.
With the 56th GST Council meeting scheduled for June or July 2025, all eyes will be on whether the Council formalizes this change. As India continues to refine its tax system post-GST implementation in 2017, such rationalisations are vital to boosting economic confidence and ensuring fair taxation across sectors. The reform, if implemented, would be a landmark decision in India’s fiscal journey.