The GST Council may talk about, at its subsequent assembly, a proposal to rationalise Goods and Services Tax (GST) charges by lowering the variety of slabs from the present 4 to a few by eradicating the 12% tax slab, folks accustomed to the matter mentioned, asking to not be named.

The GST Council, which is the apex decision-making physique on oblique tax regime, is predicted to satisfy both in June-end or July (Representational Photo)

There is a “near consensus” amongst officers and specialists advising the Group of Ministers (GoM) discussing fee rationalisation that the 12% slab has little continued relevance, and important objects utilized by frequent folks may very well be positioned in previous slab of 5% and relaxation may very well be shifted to the subsequent 18% slab, the folks added.

“This could be the most plausible way to undertake a revenue neutral tax rate rationalisation exercise. However, the GST Council has to take a final call,” one of many folks mentioned.

The GST Council, which is the apex decision-making physique on oblique tax regime, is predicted to satisfy both in June-end or July. The physique, comprising the Union finance minister and finance ministers (or senior ministers) of states, has not met since December 2024 and can probably contemplate proposals associated to the speed rationalisation together with different points, together with additional ease of compliance, the folks cited above mentioned.

The GoM on fee rationalisation was first constituted on September 24, 2021 as per the choice of the forty fifth GST Council assembly held in Lucknow with the mandate of fee rationalisation, simplification of tax construction and correcting responsibility inversions. At first ,its convener was former Karnataka CM Basavaraj S Bommai. Later, in November 2023, the convenorship went to UP finance minister Suresh Kumar Khanna. After that Bihar deputy CM Samrat Chaudhary turned its convener on February 27, 2024.

The resolution to cast off the 12% slab is endorsed by most Union and state authorities officers, specialists and GoM representatives , the primary particular person added.

Currently, India has a four-slab GST regime – 5%, 12%, 18% and 28%, broadly following the precept of decrease tax on requirements and better tax on luxurious objects. The poor are protected with zero tax on necessities akin to unpacked meals objects, salt, milk, recent greens, academic and well being providers.

The 12% tax slab consists of objects akin to condensed milk, caviar and caviar substitutes ready from fish eggs, ingesting water packed in 20 litre bottles, walkie talkies, tanks and different armoured combating automobiles, contact lenses, cheese, dates and dried fruits, frozen greens, sausages and related meat merchandise, pasta, jams and jellies, fruit juice-based drinks, namkeens together with bhujiya, curry paste, mayonnaise, tooth powder, feeding bottles, carpets, umbrellas, caps, bicycles, particular family utensils, furnishings manufactured from cane or wooden, pencils and crayons, purses and buying luggage manufactured from jute or cotton, footwear priced decrease than ₹1,000, diagnostic kits, and marble and granite blocks.

Services attracting 12% GST embody specified development work,lodge rooms as much as ₹7,500 per day, transport of passengers by air —with or with out accompanied belongings — in non- economic system lessons, sure sorts of multimodal transportation, and particular skilled, technical and enterprise providers.

Experts welcomed the concept of scrapping the 12% slab.

Saurabh Agarwal, tax companion at consultancy agency EY India mentioned: “The upcoming GST Council meeting will focus on rate rationalisation, with indications that the Council may eliminate the 12% slab in favour of a simplified three-rate GST structure. This change could enhance compliance, reduce classification disputes, and improve efficiency.”

Agarwal added that the train would require steadiness, as a result of income neutrality (the adjustments not having any influence on the general tax income) is essential.

“Revenue neutrality is essential, as the 12% slab currently includes mass-consumption goods and industrial inputs. Transitioning these to the 5% or 18% slabs will have varied revenue implications, requiring careful assessment to maintain accessibility. The inflationary impact is also a concern. Moving items from the 12% to the 18% slab could raise costs for semi-essential goods, potentially burdening consumers. A phased approach is necessary to mitigate price increases.”

Additionally, classification challenges might come up throughout the transition, resulting in interpretational points for companies, Agarwal mentioned. “Clear guidelines will be crucial to ensure a smooth shift. Aligning with global practices, many advanced GST/VAT regimes use one or two standard rates. Thus, adopting a three-rate structure would bring India closer to these standards while allowing for socio-economic flexibility,” he mentioned. “In summary, while a simplified GST structure is promising, its success will depend on careful design and stakeholder consultation.”

According to specialists, continued progress in gross GST revenues helps the necessity for fee rationalisation. Gross GST revenues noticed over 9% leap to ₹22,08,861 crore in 2024-25 as in comparison with ₹20,18,249 crore in 2023-24. The new monetary 12 months noticed report assortment within the month of April this 12 months at ₹2,36,716 crore. The income within the subsequent month (May 2025) additionally was the third highest ever at ₹2,01,050 crore.