The GST Council Advances GST Rate Rationalisation for a Simpler Tax Structure

The GST Council has made a landmark decision that marks a turning point in the evolution of the Goods and Services Tax (GST) framework. In a bid to simplify the GST structure, the Council has approved the abolition of both the 12 percent and 28 percent GST slabs. This strategic move is aimed at streamlining the tax system, benefiting taxpayers and consumers alike by creating a more efficient process.

With the approval of this rationalisation, goods and services that previously fell under the higher GST slabs will now transition into two remaining categories: 5 percent and 18 percent. Notably, around 99% of items currently taxed at 12 percent will see their rates drop to 5 percent, while approximately 90% of products previously under the 28 percent slab will shift to an 18 percent tax rate. This shift stands to make purchases more affordable for everyday consumers, which is a critical consideration in a recovering economy.

The implications of this GST rate rationalisation extend beyond mere simplification. By narrowing the tax brackets, the GST Council aims to reduce compliance burdens for businesses, allowing them to navigate the tax landscape with greater ease. Moreover, maintaining a robust revenue collection mechanism is essential. Fortunately, GST revenue has recently seen impressive collections, indicating strong economic activity, and these new rates are designed to sustain that momentum while broadening the tax base.

This reform is a testament to the ongoing governmental efforts to create a GST system that is not only efficient but also more consumer-oriented. By rationalising GST rates, the Council is fostering a conducive environment for commerce, ultimately benefiting everyone involved.