GoM approves simplified two-rate GST structure, proposes 40% for 'sin' goods
The Group of Ministers (GoM) on Rate Rationalisation has accepted the Centre's proposal for a simplified two-rate Goods and Services Tax (GST) structure, recommending it to the GST Council. The reform aims to reduce the weighted average GST rate from 14.4% to 9.5% by FY26-27. The proposal involves retaining the 5% and 18% slabs while eliminating the 12% and 28% slabs. Most items from the abolished slabs will shift to the 5% or 18% categories. However, 'sin' goods and services like tobacco, cigarettes, and online real-money gaming, previously in the 28% slab, will move to a higher 40% slab, with the existing compensation cess on these items being removed. States have raised concerns about potential revenue loss.
Key Points
- The GoM on Rate Rationalisation has endorsed the Centre's proposal for a two-rate GST structure.
- The new structure will retain 5% and 18% slabs, eliminating the 12% and 28% slabs.
- 'Sin' goods and services will be moved to a higher 40% slab, replacing the existing compensation cess.
- The reform is projected to lower the weighted average GST rate to 9.5% by FY26-27.
- States have expressed concerns about potential revenue loss and the need for a compensation mechanism.
Exam Facts
- Group of Ministers (GoM) on Rate Rationalisation.
- Proposed GST slabs: 5%, 18%, and 40% for 'sin' goods.
- Projected weighted average GST rate decline from 14.4% (May 2017) to 9.5% (FY26-27).
- Kerala Finance Minister K.N. Balagopal is a member of the GoM.
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