Major GST reform: 2 slabs approved along with new slab for luxury goods

In a major decision during the 56th GST Council meeting, the council has unanimously agreed to rationalise GST rates, simplifying the indirect tax structure across the country.

Himachal Pradesh Minister Rajesh Dharmani, speaking after the meeting, said that the council has approved a shift to three GST slabs, streamlining the tax regime. “Unanimously, everyone has agreed in favour of GST rate rationalisation. Now there will be three slabs. Effectively, it will be 5% and 18%, while 12% and 28% have been abolished. There will also be 40% GST on luxury goods,” Dharmani said.

The decision is aimed at simplifying compliance for businesses, reducing disputes, and ensuring a more uniform taxation structure. Experts say the move could benefit consumers and industries alike, particularly in sectors previously taxed at the 12% and 28% brackets, while maintaining higher taxation for luxury and sin goods under the 40% slab.

This overhaul marks one of the most significant changes in the GST structure since its rollout in 2017 and is expected to come into effect after the official notification from the Finance Ministry in the coming weeks.