India’s GST Council, the apex decision-making body on indirect taxes, is reportedly considering removing the 12% tax slab to simplify the current four-tier GST system. The proposal aims to shift all items in the 12% category to either 5% or 18%, thereby maintaining revenue neutrality and improving compliance. The final decision may be taken in the upcoming Council meeting expected in June or July 2025.
India’s Goods and Services Tax (GST) Council, the country’s apex body responsible for making decisions on GST policy, is likely to eliminate the 12% tax slab in an upcoming rate rationalisation move, according to a report by Hindustan Times. The Council comprises Union Finance Minister Nirmala Sitharaman and state finance ministers, working collectively to streamline indirect taxation in India.
Formed to oversee the implementation and regulation of GST, the GST Council was established under Article 279A of the Indian Constitution and holds significant influence over rate revisions, policy changes, and sector-specific tax relief measures.
As per officials and experts advising the Group of Ministers (GoM) on rate rationalisation, there is a near consensus to shift items currently under the 12% slab either to the 5% or the 18% category. The GoM was originally formed after the 45th GST Council meeting on September 24, 2021, with leadership successively held by Basavaraj S Bommai (Karnataka), Suresh Kumar Khanna (Uttar Pradesh), and Samrat Chaudhary (Bihar).
India currently has four GST slabs: 5%, 12%, 18%, and 28%. The removal of the 12% slab could lead to a three-tier structure that is more streamlined and easier to administer. According to sources, this move could help maintain revenue neutrality while reducing complexity.
Items currently under the 12% slab include:
- Goods: Condensed milk, packed drinking water, cheese, dried fruits, pasta, sausages, jams, fruit-based drinks, namkeens, mayonnaise, tooth powder, carpets, umbrellas, jute bags, bicycles, footwear below ₹1,000, diagnostic kits, marble blocks, etc.
- Services: Hotel rooms below ₹7,500, non-economy class air travel, construction services, and select professional and technical services.
The GST Council last convened in December 2024. Its upcoming meeting is expected in June or July 2025, where rate rationalisation and ease of compliance are likely to be key agenda items.
