Talks talks progress on consolidating 12% & 5% Goods and Services Tax slabs
India’s Finance Minister, Nirmala Sitharaman, has confirmed 8th March 2025 that talks started last September on rationalising Goods and Services Tax ‘slabs’ or rates are in their final stages. The aim is the consolidation of the country’s five rates to four (inc 0%), with the removal of the 12% rate. He also said GST rates will come down further.
Read more at: https://www.deccanherald.com/india/changes-in-gst-must-be-more-comprehensive-than-mere-rate-reduction-congress-3439071
The talks started at the GST Council started 9 September.
The GST Council, comprising finance ministers of Centre and states, is the lead decision making body with regard to Goods and Services Tax (GST).
India has been toying with the reform for almost two years; the last failed attempt was in February as part of the 2024 Finance Bill.
Five GST rates into four
The current rates are:
- 28% – vehicles; fizzy drinks; air conditioners; nightclub entrance; luxury hotels and restaurants, and gambling
- 18% main rate applying to over 450 defined goods and services, including luxury restaurants and hotels
- 12% second main rate applying to over 250 defined goods and services including other hotels and restaurants; non-dwelling construction
- 5% – passenger air travel; construction of dwellings; restaurants
- 0%
There are also a precious stones (0.25%) and metals (3%) rates. Sign-up for VAT Calc’s FREE global VAT and GST news e-mail updates.
This is likely to be cut to four rates, as follows:
- 28% luxuries
- 18% main rate
- 5% reduced rate
- 0%
The disruption caused by COVID-19 prevented an earlier consolidation. India implemented GST in 2017, There are also discussions to bring fuel into the GST net.
