Group of Ministers accepts 2-slab structure proposal

New Delhi:The Group of Ministers (GoM) of state ministers on Goods and Services Tax (GST) rate rationalisation has accepted the Centre's proposal to move to a two-slab structure of 5 and 18 per cent. Confirming the decision, Bihar Deputy Chief Minister and convenor of rate rationalisation GoM Samrat Choudhary said the six-member state ministerial panel has also accepted the proposal of removing the 12 and 28 per cent slabs.

Both the proposals of the Centre have been accepted by the GoM on rate rationalisation," Choudhary told reporters after the meeting of the panel.

According to Choudhary, the proposal to remove the two slabs was deliberated upon during the meeting and received general support.

Speaking to reporters after the meeting, Uttar Pradesh Finance Minister Suresh Kumar Khanna said the Centre's proposal also includes levying a 40 per cent tax on ultra-luxury and sin goods.

Proposed Levy On Top Of 40 Per Cent GST Rate 

West Bengal Finance Minister Chandrima Bhattacharya said her state has proposed a levy on top of the 40 per cent GST rate so that the current tax incidence on ultra-luxury goods, such as cars, and sin goods is maintained.

Bhattacharya said the Centre's proposal did not mention the revenue loss that would accrue to the Centre and states after the implementation of the new GST slabs.

GST Currently Has Four Slabs

Currently, the Goods and Services Tax (GST) has four slabs: 5, 12, 18, and 28 per cent. While food items are either taxed at 0 or 5 per cent, luxury and sin goods are taxed at 28 per cent.

On top of the 28 per cent slab, cess at varied rates is levied on demerit and luxury goods, like cars.

In his Independence Day speech, Prime Minister Narendra Modi announced restructuring aimed at rationalising the existing GST structure, which currently includes multiple tax slabs: 5 per cent, 12 per cent, 18 per cent, and 28 per cent.