GoM on rate rationalisation approves Centre’s two-rate GST proposal

The Group of Ministers (GoM) on Rate Rationalisation, formed by the Goods and Services Tax (GST) Council, has decided to accept the Centre’s two-rate structure proposal for GST and will be recommending this to the GST Council, the chairperson of the GoM and Bihar Deputy Chief Minister Samrat Choudhary said on Thursday (August 21, 2025).

“It was the Centre’s proposal to end two slabs of GST, the 12% and 28% slabs,” Mr. Choudhary told reporters. “We discussed that proposal and have supported it. We have recommended it, and now the GST Council will decide on this.”

​Required reforms: On reforms to the GST system 

The Centre has not, however, decided on the date for the next GST Council meeting, although it is expected in early September.  

The Centre had proposed to reduce the number of slabs under the Goods and Services Tax system, retaining the 5% and 18% slabs, while introducing a lower concessional rate below 1% and a high “sin rate” of 40% on just five to seven items each, according to official sources. 

This would entail entirely doing away with the 12% and 28% tax brackets. Of these, 99% of items currently in the 12% slab will be moved to the 5% rate, and 90% of goods and services in the 28% bracket will move to 18%. There will be no cess of any kind over and above the GST rates. 

These reforms would be part of a “Deepavali gift” from the Centre in the form of the “next-generation GST reforms”, Prime Minister Narendra Modi announced during his Independence Day speech at Delhi’s Red Fort on August 15, 2025. The reforms will bring down “tax burden on the common man”, he added.