GoM Supports Central Government's Proposal to Eliminate Certain GST Slabs

The Group of Ministers has shown support for the Central Government's proposal to eliminate the 12% and 28% GST slabs, a move aimed at simplifying the tax structure. Concerns regarding potential revenue losses were raised by various state representatives, emphasizing the need for compensation mechanisms. The final decision will be made by the GST Council after reviewing the recommendations and feedback from the states. This restructuring is part of a broader initiative to rationalize the existing GST framework, which currently includes multiple tax rates.

By Narendra Chaudhary Aug 21, 2025, 22:25 IST

Support for GST Restructuring

On Thursday, Bihar's Deputy Chief Minister Samrat Choudhary announced that the Group of Ministers (GoM) has expressed its backing for the Central Government's initiative to abolish the 12% and 28% tax slabs under the Goods and Services Tax (GST) framework.

Choudhary stated, "We have endorsed the two proposals from the Government of India regarding the removal of the 12% and 28% GST slabs," following a meeting with Union Finance Minister Nirmala Sitharaman. He noted that while all states contributed to the discussions and provided input, some had specific observations. "Everyone offered suggestions regarding the proposals from the Centre. A few states raised concerns, which have been forwarded to the GST Council for consideration," he added.

The proposal to eliminate these two tax brackets was discussed during the meeting and garnered widespread support. Choudhary reiterated, "The Central Government's proposal to remove these slabs was thoroughly discussed and received our backing. We have submitted our recommendations, and the GST Council will make the final decision on this matter."

Concerns Over Revenue Loss

West Bengal's Health Minister, Chandrima Bhattacharya, addressed reporters, stating, "All states are aligned with the interests of the common people. However, I raised concerns during the meeting about potential revenue losses for states, which ultimately affect the public. We seek clarity on how we will be compensated for any losses incurred. The GoM will compile its report for the GST Council, highlighting our concerns."

She further mentioned, "We are currently unaware of the revenue impact resulting from this GST rate reduction, as no assessment has been conducted yet. We will gain insights during the GST Council discussions."

Lack of Clarity on Financial Impact

Uttar Pradesh's Finance and Parliamentary Affairs Minister, Suresh Khanna, commented on the revenue implications, stating, "The presentation provided to the Centre did not specify the extent of the losses incurred, making it difficult to quantify the impact of the GST changes. Our primary concern is ensuring that the common people benefit from these adjustments."

Broader Efforts for GST Simplification

In his Independence Day address, Prime Minister Narendra Modi announced plans to restructure the GST system, which currently comprises multiple tax slabs of 12%, 18%, and 28%.

The initiative to remove the 12% and 28% tax brackets is viewed as part of a larger strategy to simplify the indirect tax system and minimize classification disputes. The GST Council will now review the recommendations and feedback from various states before making any changes.

On Wednesday, the Finance Minister met with the Group of Ministers (GoMs) established by the GST Council to discuss Compensation Cess, Health and Life Insurance for individuals, and Rate Rationalisation at Vigyan Bhawan.