The 56th GST Council meeting started today in New Delhi to discuss major changes to India’s goods and services tax (GST). Finance Minister Nirmala Sitharaman chairs the Council, which includes representatives from all 31 states and union territories. The focus is on lowering taxes for common goods and essential services like health and life insurance.
GST started in 2017 and replaced 17 indirect taxes. Over the years, rates have been changed many times. This round of reforms aims to make GST simpler and easier to follow. The government plans to make registration, filing returns, and refunds faster and simpler.
The reforms will cover many sectors, including agriculture, textiles, health, construction, renewable energy, handicrafts, and insurance. The current four tax slabs—5%, 12%, 18%, and 28%—may be reduced to two main slabs: 5% for basic items and 18% for most products. Sin and luxury items like tobacco, pan masala, and cigarettes may face a higher 40% rate.
Most items now taxed at 12% could move to 5%, and many goods at 28% could move to 18%. Items like packaged food, medicines, educational products, and renewable energy items could have lower taxes or be tax-free. White goods like TVs, air conditioners, and dishwashers may see their tax drop from 28% to 18%.
Services like individual health and life insurance, and hotels with tariffs under Rs 7,500 per day, could get tax benefits. Small electric vehicles may pay 18% GST, while luxury electric vehicles could pay 40%. Online gaming, lottery, and casinos may be taxed at 40%.
The reforms also aim to fix problems like inverted duty structure and classification disputes, making GST simpler for businesses. Pre-filled returns and automated refunds will make compliance easier.
Revenue may fall initially by Rs 70,000-80,000 crore, but higher compliance and consumption could balance it. States want compensation if revenue drops.
These reforms are considered the biggest changes to India’s indirect tax system since 2017. They aim to make GST simpler, fairer, and easier for businesses and citizens.
