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2h ago

State Ministers Back Two-Slab GST Overhaul, Send Plan to Council

The GoM endorsed 5% and 18% rates with a 40% band for select demerit goods, with a revenue-impact assessment headed to the GST Council in early September.

(From right) Union finance minister Nirmala Sitharaman and MoS Pankaj Chaudhary at a meeting of the Group of Ministers (GoM) in New Delhi. Bihar FM Samrat Choudhary is the convener of the GoM.
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Overview

  • GoM on rate rationalisation unanimously accepted the Centre’s blueprint to scrap the 12% and 28% slabs and shift items to 5%, 18% and a limited 40% category for ultra‑luxury and sin goods.
  • A separate GoM recommended exempting individual health and life insurance premiums from GST, with states seeking safeguards to ensure insurers pass benefits to policyholders.
  • Officials signalled the GST Council could meet in early September to take final decisions, targeting a Diwali‑season rollout if approved.
  • States pressed for quantified revenue‑loss estimates and protection once the compensation cess ends, with SBI Research pegging potential annual losses at about Rs 85,000 crore.
  • Some ministers proposed keeping effective taxes on luxury and sin goods at current levels through additional levies, and flagged ITC loss risks if insurance is exempt rather than zero‑rated.