GST council meeting under way: What will become cheaper & dearer after GST slab changes? Top things to expect

The Goods and Services Tax (GST) Council meeting began on Wednesday to decide on rate cuts and slab changes for a majority of items under the indirect tax. The 56th GST council meeting will be held on September 3 and 4, after which the GST rate cuts promised by PM Narendra Modi during his Independence Day speech are expected to be announced. Finance Minister Nirmala Sitharaman is presiding over the meeting.

GST changes are considered essential for strengthening domestic demand and offsetting potential losses faced by businesses due to the US imposing 50% import duty on Indian exports.


Ahead of the meeting FM Sitharaman, speaking at a City Union Bank event, highlighted how the next generation of GST reforms would create a more transparent economic environment and reduce compliance requirements, particularly benefiting small enterprises.

She spoke of the the compliance-easing taskforce established by PM Narendra Modi and stated: "Complementing this, the planned rollout of the next generation GST reforms with a council meeting tomorrow (Wednesday) and the day after, and in the coming months, it will set an economy absolutely open and transparent."

What is expected to be cheaper & dearer after GST slab changes?

• Modi government’s proposal on GST rate cuts and slab changes includes consolidating the tax brackets to three levels - 5%, 18% and 40% - by redistributing items from the 12% and 28% categories.
• The proposed changes suggest uniform 5% taxation for all food items and textile products, currently spread across various rates.
• Additionally, consumer durables are proposed for the 18% bracket, resulting in reduced GST for commonly used items like refrigerators, large TC sets and air-conditioners.
• A 40% tax rate would apply to sin goods and select luxury items, such as large cars, likely eliminating the current cess system. Industries, particularly automobiles and textiles sectors, are actively advocating regarding these rate modifications.
• The restructuring would likely result in approximately 99 per cent of items presently under the 12 per cent taxation moving to the 5 per cent bracket, whilst about 90 per cent of goods currently taxed at 28 per cent would shift to the 18 per cent category.

Additionally, the government has shared plans to streamline registration and filing procedures to reduce business administrative burden. The simplified slab structure aims to eliminate classification-related concerns for businesses.

GST Council Meeting: Challenges for FM Sitharaman

The implementation of the strategy heavily depends on gaining support from all states, presenting a significant task for Sitharaman, who leads the influential council with state ministers and representatives from three Union Territories (Delhi, J&K and Puducherry).

States under opposition leadership have intensified their demands before the meeting, seeking compensation for lost revenue. The Centre has acknowledged potential short-term revenue impacts but maintains that increased consumption will restore collection levels.

The meeting gained significance following PM Modi's Independence Day speech, where he indicated a "big reform of GST" before the festival season, suggesting a "very big gift" for Diwali.

The Council is scheduled to continue discussions tomorrow, with announcements expected after the completion of deliberations.