GST Council to Decide on New Two-Slab Tax System Aimed at Lowering Prices and Boosting Spending
The GST Council, led by Finance Minister Nirmala Sitharaman, is meeting today to discuss important changes to India’s tax system. The focus is on reducing GST rates on many goods — especially items used daily by middle-class families.
A new system with just two main tax slabs (5% and 18%) is being proposed, which could bring down prices on a wide range of products. The government hopes this will increase spending and help grow the economy, even if it means a temporary revenue loss of ₹50,000 crore.
Top 10 Simple Takeaways from the GST Council Meeting Agenda
1. Two Tax Rates Proposed: 5% and 18%
- Items will be divided into two categories:
- Merit goods (essential items) – taxed at 5%
- Standard goods – taxed at 18%
- This will replace the current system with four tax rates: 5%, 12%, 18%, and 28%
2. Prices of Daily-Use Goods Likely to Fall
- Many everyday items may move from the 12% to 5% slab.
- Items currently taxed at 28%, such as some electronics, may shift to 18%.
3. Middle-Class Families to Benefit the Most
- Cheaper goods mean lower monthly expenses for households.
- This move is expected to give a financial break to middle-income groups.
4. Revenue Loss of ₹50,000 Crore Expected
- The government may lose some tax income initially.
- However, higher spending by people could balance out the loss over time.
5. 40% ‘Sin Tax’ on Harmful or Luxury Items
- A special high tax will apply to items like:
- Tobacco products
- Luxury cars
- Only 5–7 items will fall under this “sin tax” category.
6. Boost to the Economy Expected
- The government hopes this change will:
- Increase buying
- Support businesses
- Speed up economic growth
7. Good News on India’s Growth
- India’s economy grew 7.8% in the first quarter of FY26.
- These tax cuts could help push growth even higher in the coming months.
8. Report Says Consumption Could Rise by ₹5.31 Lakh Crore
- A study by SBI Research says GST changes and income tax cuts could boost spending by a huge amount — about 1.6% of the GDP.
9. Government’s Goal: Reform + Relief + Ease of Living
- These tax changes are part of a larger plan focused on:
- Simplifying the tax system
- Reducing the tax burden
- Making life easier for citizens and businesses
10. Some States Worry About Losing Revenue
- States like Tamil Nadu, Punjab, and West Bengal are concerned about lower tax collections.
- They want:
- Compensation from the centre
- Extra tax on luxury items to share with states
What This Means for You
If approved, this GST change could bring down prices on many things you use every day — from groceries to household items. It’s a move aimed at making life easier for the common man, while also giving a push to the Indian economy.
Keep an eye out for the final decision from the GST Council — it could impact your wallet very soon.
Also Read : India Plans Higher GST on Luxury EVs in Blow to Tesla, BMW, Mercedes
