The Group of Ministers (GoM) on GST rate rationalisation has accepted the Centre’s proposal to reduce the current four-tier GST structure into two slabs of 5% and 18%, sources confirmed on Thursday.
The six-member GoM, chaired by Bihar Deputy Chief Minister Samrat Choudhary, met to deliberate on rationalising rates under the Goods and Services Tax regime. Members include finance ministers from Uttar Pradesh, Rajasthan, West Bengal, Karnataka, and Kerala.
The Centre had proposed eliminating the existing 12% and 28% slabs, moving almost 99% of items in the 12% category to the 5% bracket, while the rest would shift to 18%. A special rate of 40% has also been suggested for a limited number of items, including sin goods.
Union Finance Minister Nirmala Sitharaman earlier said the move would simplify the tax regime, provide relief to the middle class, farmers, and MSMEs, and ensure a growth-oriented, transparent system.
In parallel, the GoM on insurance had already discussed exempting GST on health and life insurance policies for individuals, a step expected to have a revenue impact of ₹9,700 crore annually. Most states are reported to be supportive of this change, with an emphasis that benefits must reach policyholders directly.
The adoption of a simplified two-rate GST system is seen as a landmark reform in indirect taxation and could pave the way for smoother compliance, reduced disputes, and a boost to consumption. The proposal will now be placed before the GST Council for final approval.
