Big GST shakeup coming? Govt mulling fewer slabs, simpler rules. Here's what we know
One key proposal under review is the elimination of the 12% slab, with goods currently in that category likely to be redistributed to the 5% or 18% slabs.
- Jul 16, 2025,
- Updated Jul 16, 2025 8:50 AM IST
India’s GST regime may soon see its most significant overhaul since inception, with the Prime Minister’s Office reportedly giving in-principle approval for a revamp that could reshape tax slabs and streamline procedures, according to a report by The Economic Times.
The proposal, which is expected to be taken up by the GST Council after the monsoon session of Parliament in August, includes a potential recast of rate structures and procedural simplifications aimed at easing compliance for both businesses and consumers.
Business Today could not independently verify the claims made in the report.
The revamp, under consideration for months, follows sustained pressure from industry bodies and bipartisan calls from lawmakers to address longstanding issues with the current GST framework. The existing structure has five major tax slabs—nil, 5%, 12%, 18%, and 28%—along with two additional rates of 0.25% and 3% for bullion.
One key proposal under review is the elimination of the 12% slab, with goods currently in that category likely to be redistributed to the 5% or 18% slabs. Currently, the 5% slab covers about 21% of all goods under GST, while 12% and 18% cover 19% and 44%, respectively. The 28% slab applies to just 3% of goods, largely those categorized as sin goods such as cigarettes and luxury automobiles.
The finance ministry has begun inter-ministerial consultations and will initiate dialogue with states to build political consensus. A ministerial panel tasked with rate rationalisation has so far made limited progress, but the broader economic context—marked by tax stability and healthy macroeconomic fundamentals—may provide the momentum needed.
The government is also considering this move in light of ongoing free trade negotiations with developed nations, aiming to ensure that domestic industries remain competitive as new trade opportunities open up. A parallel effort to revamp the income tax framework is also expected during the monsoon session.
A separate ministerial panel continues to evaluate the future use of the compensation cess fund, which remains in place until March 2026 to repay the ₹2.69 lakh crore borrowed by the Centre during the Covid period on behalf of states.
The proposed changes, if cleared, would mark the first major recalibration of GST since it was introduced in July 2017.
India’s GST regime may soon see its most significant overhaul since inception, with the Prime Minister’s Office reportedly giving in-principle approval for a revamp that could reshape tax slabs and streamline procedures, according to a report by The Economic Times.
The proposal, which is expected to be taken up by the GST Council after the monsoon session of Parliament in August, includes a potential recast of rate structures and procedural simplifications aimed at easing compliance for both businesses and consumers.
Business Today could not independently verify the claims made in the report.
The revamp, under consideration for months, follows sustained pressure from industry bodies and bipartisan calls from lawmakers to address longstanding issues with the current GST framework. The existing structure has five major tax slabs—nil, 5%, 12%, 18%, and 28%—along with two additional rates of 0.25% and 3% for bullion.
One key proposal under review is the elimination of the 12% slab, with goods currently in that category likely to be redistributed to the 5% or 18% slabs. Currently, the 5% slab covers about 21% of all goods under GST, while 12% and 18% cover 19% and 44%, respectively. The 28% slab applies to just 3% of goods, largely those categorized as sin goods such as cigarettes and luxury automobiles.
The finance ministry has begun inter-ministerial consultations and will initiate dialogue with states to build political consensus. A ministerial panel tasked with rate rationalisation has so far made limited progress, but the broader economic context—marked by tax stability and healthy macroeconomic fundamentals—may provide the momentum needed.
The government is also considering this move in light of ongoing free trade negotiations with developed nations, aiming to ensure that domestic industries remain competitive as new trade opportunities open up. A parallel effort to revamp the income tax framework is also expected during the monsoon session.
A separate ministerial panel continues to evaluate the future use of the compensation cess fund, which remains in place until March 2026 to repay the ₹2.69 lakh crore borrowed by the Centre during the Covid period on behalf of states.
The proposed changes, if cleared, would mark the first major recalibration of GST since it was introduced in July 2017.