GST Council Meeting 2025: It is expected that the majority of items in the 12 per cent slab will be moved to the 5 per cent slab, making them much cheaper.
The 56th GST Council meeting is underway in the national capital. Chaired by Union Finance Minister Nirmala Sitharaman, the meeting will discuss a proposal that seeks to prune the number of tax slabs from four to just two. The Centre has proposed having just two tax slabs of 5 and 18 per cent by moving products from the current 12 and 28 per cent to lower rates. A special 40 per cent rate has been proposed to be levied on a select few items. It is expected that the majority of items in the 12 per cent slab will be moved to the 5 per cent slab, making them much cheaper. Similarly, a large number of items will be moved from the 28 per cent slab to the 18 per cent slab. However, the final decision will be announced by Sitharaman on September 4.ย
Currently, there is a 4-tier GST structure of 5, 12, 18 and 28 per cent.ย ย
Opposition-Ruled States Seek Compensationย ย
While the pruning of the tax slabs and the resultant expected fall in prices have been welcomed, finance ministers of opposition-ruled states has decided to seek compensation for any loss of the revenue that may occur because of the rejig.
Eight opposition-ruled states – Himachal Pradesh, Jharkhand, Karnataka, Kerala, Punjab, Tamil Nadu, Telangana and West Bengal – had met last week to decide on how their revenues could be protected once the 12 and 28 per cent slabs are removed.
List of items expected to get cheaper
While the Group of Ministers (GoM) has favoured charging electric vehicles priced up to Rs 40 lakh with an 18 per cent GST, sources said that the Centre is keen to push EV adoption and favours a 5 per cent rate.
Most of the commonly used food items like ghee, nuts, drinking water (20 litres), non-aerated drinks, namkeen, certain footwear and apparel, medicines and medical devices are likely to get cheaper as they will be moved from a 12 per cent to a 5 per cent tax slab. Everyday use items ranging from pencils, bicycles, umbrellas, to hairpins may also move to a 5 per cent slab.
Prices of electronic items like certain category of TV, washing machine and refrigerator are likely fall because of being taxed at a lower rate of 18 per cent, as against 28 per cent currently.
List of items expected to get costlier
Goods like automobiles that are currently charged at the highest slab of 28 per cent, plus a compensation cess, may see differential rates with entry-level cars being charged at an 18 per cent rate. However, SUVs and luxury ones are expected to be put in the special 40 per cent rate.
The special 40 per cent rate will also be for other demerit goods like tobacco, pan masala, cigarettes and alcohol. Readymade garments priced above Rs 2,500 could be shifted from a 12 per cent slab to 18 per cent.