The GST Council is considering changes to the Goods and Services Tax (GST) structure. The plan involves eliminating the 12% GST slab by redistributing items into the 5% and 18% tax brackets.
This move aims to simplify the tax system and ease compliance requirements for businesses.
According to sources close to the matter, this change could lead to a more streamlined GST framework with only three slabs: 5%, 18%, and 28%.
Focus on Simplifying the GST System
An anonymous source revealed that instead of merging the existing 12% and 18% slabs, the 12% slab could be phased out entirely.
This proposal has been under consideration for some time, and pressure has been growing on the GST Council to rationalize the tax slabs.
With the GST system completing seven years, the need for simplifying the tax structure has become more pressing.
Reduced Compliance Burden for Businesses
Experts believe that removing the 12% slab will help reduce the compliance burden on businesses.
Rajat Mohan, Executive Director of the consultancy firm Mor Singhi, stated that shifting items from the 12% slab to the 5% or 18% slabs will make the tax system simpler and easier to manage.
This change could be a significant step toward a more efficient tax structure.
Report Expected from Group of Ministers
A Group of Ministers (GoM), led by Bihar’s Deputy Chief Minister Samrat Chaudhary, is working on this proposal and is expected to submit a report by the end of this month.
The GST Council will likely discuss the report in their meeting next month. However, the process may take time as states will need to assess the potential impact on their revenues before giving their approval.
