New Delhi: The Union government is weighing a significant overhaul of the Goods and Services Tax framework, with plans to eliminate the 12% and 28% tax brackets and move to a simpler two-slab system, government sources revealed on Friday.
Under the proposed structure, GST would be charged at either 5% or 18% on most goods and services. The 28% slab could remain only for a narrow category of luxury or sin goods, while the 12% rate would be merged into the 18% bracket.
The move is aimed at simplifying tax compliance, reducing classification disputes, and bringing greater transparency to the indirect tax regime. Officials say the change would also help businesses by providing a more uniform tax rate structure, though it could lead to some price adjustments for consumers.
Currently, GST is levied in four main slabs — 5%, 12%, 18%, and 28% — with additional cess applied to certain products such as tobacco, luxury cars, and aerated drinks.
“The idea is to make GST more predictable and easier to administer,” a senior official involved in the discussions said, adding that the proposal will be presented to the GST Council for deliberation in its upcoming session.
Industry bodies and tax experts are expected to closely monitor the discussions, as the shift could have a notable impact on pricing, revenue, and consumer spending patterns.
