GST On Essentials Items May Drop To 5 Per Cent As Centre Mulls Slab Restructuring: Report

In a move that could significantly ease the financial burden on middle- and lower-income households, the Central government is considering a major restructuring of the Goods and Services Tax (GST) rate slabs, India Today reported, citing sources.

As per the report, one key proposal under discussion is to either reduce the 12 per cent GST slab to 5 per cent for certain essential goods or eliminate the 12 per cent slab altogether.

Most of the items currently taxed at 12 per cent are commonly used by middle-class and economically weaker households.

The reclassification of these items into the 5 per cent slab would bring down prices for consumers, according to the sources cited in the report.

Alternatively, if the 12 per cent slab is scrapped entirely, goods may be shifted to existing lower or higher tax brackets, depending on their nature and usage.

As per standard protocol, a 15-day notice is required to convene the Council meeting.

The GST Council is chaired by the Union Finance Minister and includes finance ministers from all states. It holds the authority to recommend changes in tax rates.

If approved, the proposal would represent one of the most substantial revisions to the GST framework since its launch in 2017.

The move is also seen as politically significant in the run-up to elections and is expected to help curb inflation on key consumer goods.