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5d ago

India Sends Two-Slab GST Blueprint to GoM in Push for Diwali Rollout

Pending approval by the GoM alongside the GST Council, the finance ministry’s two-slab proposal would simplify rates to 5%/18% tiers with a 40% levy for sin goods

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The Central government has proposed two tax rates of 5% and 18% in the revamped goods and services tax (GST), slated to replace the current indirect tax regime by Diwali this year. (Representative photo) (iStockphoto)

Overview

  • The finance ministry formally presented its two-slab GST proposal to a Group of Ministers led by Bihar Deputy CM Samrat Chaudhary, fulfilling PM Modi’s promise of Diwali reforms.
  • Government sources say the plan would move 99% of items in the 12% slab into the 5% tier and shift about 90% of goods taxed at 28% into the 18% rate.
  • A 40% demerit levy is being proposed for tobacco and other sin goods to replace the compensation cess that expires on March 31, 2026.
  • The GoM’s recommendations are expected to reach the GST Council for state-level consensus in September or October under cooperative federalism.
  • Proposed administrative changes include technology-driven registration, pre-filled returns and faster refunds aimed at easing compliance for MSMEs.