TV
The 56th meeting of the GST Council kicked off on Wednesday, setting the stage for a major restructuring of India’s indirect tax regime. Chaired by Finance Minister Nirmala Sitharaman, the two-day meeting is focused on simplifying tax slabs, reducing rates on essential items, and easing compliance to boost domestic spending and offset the economic hit from US tariffs.
Towards a Simpler Tax Structure
The council is reviewing a plan to cut the existing four-rate structure (5%, 12%, 18%, and 28%) to a two-tier system of 5% and 18%, with a special 40% slab reserved for luxury goods such as high-end cars, tobacco, and yachts. Sources indicate that final decisions will be announced on Thursday.
What May Get Cheaper
Daily-use items like butter, ghee, dry fruits, jam, ice cream, and packed drinking water may see GST rates cut from 18% to 5%. Footwear and apparel priced up to Rs 2,500 could also move to the 5% slab, up from the Rs 1,000 cap.
Consumer goods like toothpaste, shampoo, soap, and bicycles may also become cheaper with rates dropping from 12–18% to just 5%. Even cement and small petrol and diesel vehicles could see reduced taxes.
Opposition Push for Revenue Protection
While many states support the move, opposition-ruled states like Karnataka, Kerala, and West Bengal are demanding assurance of revenue protection. Jharkhand, for instance, fears a Rs 2,000 crore revenue loss without central compensation.
Economic Impact
Experts predict the GST revamp could add up to 0.5 percentage points to GDP growth by the second year, making consumption-driven growth stronger despite external economic pressures.
