GST 2.0: GoM Approves Two Slab Structure of 5% and 18%
The long-awaited GST reform has moved forward with the Group of Ministers (GoM) on rate rationalisation approving a shift from the current four slabs to two: 5% and 18%.
Under the plan, the 12% and 28% slabs will be scrapped. Nearly 99% of goods in the 12% bracket will move to 5%, while 90% of items in the 28% slab will shift to 18%. A higher 40% tax will continue on luxury and sin goods such as tobacco and luxury cars.
The GoM, chaired by Bihar Deputy CM Samrat Choudhary, said the new system called GST 2.0 will simplify compliance and reduce the burden on households and businesses. Everyday items like medicines, processed food, clothing, and footwear will fall under 5%, while durables such as TVs and appliances will move to 18%.
The panel also reviewed a proposal to exempt health and life insurance premiums from GST, a move that could cost the exchequer about ₹9,700 crore annually. States have sought safeguards to ensure insurers pass on the benefit to customers.
The GoM’s recommendations will be sent to the GST Council, which will take a final decision in its upcoming meeting. If cleared, this will be one of the biggest GST reforms since its rollout in 2017.
