GST Reforms: Big Proposal from Central Government

The Central Government is preparing for a major change in India’s indirect tax system. As part of the GST reforms, the government has proposed replacing multiple tax slabs with only two – 5% and 18%.

• 5% Slab: Almost 99% of goods currently under the 12% slab will be shifted to 5%.

• 18% Slab: Nearly 90% of goods from the 28% slab will be brought under 18%. This will reduce the prices of household appliances like ACs, refrigerators, and washing machines.

• Special Tax: Cigarettes, gutkha, and other harmful products will attract a 40% special tax. Only 5–7 luxury/harmful items will be included.

• Exemptions: Petroleum products remain outside GST. Diamonds and precious stones will continue with existing rates.

Why this reform?
Currently, 67% of GST revenue comes from the 18% slab. By reducing rates, the government expects to boost purchasing power, increase consumption, and balance revenue through higher usage.

Expert Opinion:
“This will benefit common people, middle-class families, farmers, and women. Prices of many essential goods will come down,” said GST expert Ved Jain.

The final decision will be taken by the GST Council in September or October, where State Finance Ministers will also give their approval.