NEW DELHI: A key meeting of the Group of Ministers (GoM) on GST rate rationalisation commenced on Thursday to deliberate the Centre’s proposal to simplify tax slabs to 5% and 18%.
The six-member GoM, tasked with rate rationalisation, is chaired by Bihar Deputy Chief Minister Samrat Choudhary. Other members include Uttar Pradesh Finance Minister Suresh Kumar Khanna, Rajasthan Health Minister Gajendra Singh, West Bengal Finance Minister Chandrima Bhattacharya, Karnataka Revenue Minister Krishna Byre Gowda, and Kerala Finance Minister K N Balagopal.
Under the proposed reforms, the number of GST slabs would be reduced from four (5%, 12%, 18%, and 28%) to two (5% and 18%). Finance Minister Nirmala Sitharaman had earlier told the GoM that this rationalisation would “provide greater relief to the common man, farmers, the middle class, and MSMEs, while ensuring a simplified, transparent, and growth-oriented tax regime.”
Separately, the GoM on insurance, which met Wednesday evening, discussed the Centre’s proposal to exempt GST on health and life insurance policies for individuals. While the move is expected to impact revenues by around ₹9,700 crore annually, most states supported the proposal. They also emphasised that the GST Council should ensure the benefits of any tax cut reach policyholders directly.
In Thursday’s session, the GoM on rate rationalisation is set to examine the Centre’s plan to classify goods and services as ‘merit’ or ‘standard’ items, applying 5% and 18% rates accordingly. A special 40% rate has been suggested for a small set of 5–7 products, including sin goods. Under the proposal, the 12% and 28% slabs would be scrapped, with nearly 99% of items currently in the 12% bracket reclassified to 5%, and 90% of items in the 28% bracket reduced to 18%.
