The Centre is considering a major overhaul of the Goods and Services Tax (GST) framework, with a proposal to streamline the system into just two primary slabs 5% and 15% (18%), according to government sources. .

Under the plan, 90% of goods currently in the 28% slab would shift to the 18% /15?tegory, while 99% of items in the 12% slab would move to the 5% slab. A special 40% rate would apply to luxury and sin goods such as tobacco, gutkha, and cigarettes, covering only 5–7 items. Notably, this high-tax bracket would exclude aspirational consumer goods like refrigerators, air conditioners, and washing machines. Petroleum products will remain outside the GST regime even after the revamp.

Labour-intensive, export-oriented sectors including diamonds and precious stones will continue under their existing rates. The proposed structure aims to keep the overall tax incidence at 88%, matching current levels, while boosting consumption to offset potential revenue loss from lower rates.

Data from the Union Finance Ministry shows 67% of GST revenue comes from items in the 18% slab, followed by 11% from the 28% slab, 7% from the 5% slab, and 5% from the 12% slab. Officials believe that simplifying rates will benefit all sections of society, especially the common man, women, students, the middle class, and farmers.

Prime Minister Narendra Modi, in his Independence Day address, hinted at upcoming GST reforms, promising a “double Diwali” for the economy. The proposal is part of a broader next-generation reform agenda, which also includes a national deep-water exploration mission for energy self-reliance and the development of an indigenous “Sudarshan Chakra” defence system by 2035.

The GST Council, comprising Union and state finance ministers, is expected to review and possibly approve the proposal in September or October.

The Centre is considering a major overhaul of the Goods and Services Tax (GST) framework, with a proposal to streamline the system into just two primary slabs 5% and 15% (18%), according to government sources. .

Under the plan, 90% of goods currently in the 28% slab would shift to the 18% /15?tegory, while 99% of items in the 12% slab would move to the 5% slab. A special 40% rate would apply to luxury and sin goods such as tobacco, gutkha, and cigarettes, covering only 5–7 items. Notably, this high-tax bracket would exclude aspirational consumer goods like refrigerators, air conditioners, and washing machines. Petroleum products will remain outside the GST regime even after the revamp.

Labour-intensive, export-oriented sectors including diamonds and precious stones will continue under their existing rates. The proposed structure aims to keep the overall tax incidence at 88%, matching current levels, while boosting consumption to offset potential revenue loss from lower rates.

Data from the Union Finance Ministry shows 67% of GST revenue comes from items in the 18% slab, followed by 11% from the 28% slab, 7% from the 5% slab, and 5% from the 12% slab. Officials believe that simplifying rates will benefit all sections of society, especially the common man, women, students, the middle class, and farmers.

Prime Minister Narendra Modi, in his Independence Day address, hinted at upcoming GST reforms, promising a “double Diwali” for the economy. The proposal is part of a broader next-generation reform agenda, which also includes a national deep-water exploration mission for energy self-reliance and the development of an indigenous “Sudarshan Chakra” defence system by 2035.

The GST Council, comprising Union and state finance ministers, is expected to review and possibly approve the proposal in September or October.