India may soon see one of the biggest changes in its tax system since GST was first introduced in 2017. The Group of Ministers (GoM) on GST rate rationalisation, chaired by Bihar Deputy Chief Minister Samrat Choudhary, has cleared the Centre’s proposal to simplify GST slabs. The plan will now go to the GST Council for approval before it becomes official.
GoM Clears Major GST Rationalisation Plan
GST is divided into four slabs – 5%, 12%, 18%, and 28% – for now. Fair to say, this tax system is confusing for both businesses and consumers. The new proposal is straightforward: India will now have only two main GST rates, 5% and 18%. Almost everything that was in the 12% slab will shift down to 5%, and a majority of items in the 28% slab will move down to 18%, Financial Express reported.
Only a few luxury goods and special items will remain taxed at the highest rate. Finance Minister Nirmala Sitharaman has said this move will bring big relief to the middle class, farmers, small businesses, and households, while making the system more transparent and growth-friendly.
The two sectors that could see the biggest impact are food and travel. Everyday groceries and kitchen staples like ghee becoming cheaper will give households much-needed relief at a time when prices have been rising. Travel, too, is set to get more exciting. If the GST Rationalisation plans are approved, leading to the taxes on business class flights and hotel stay prices to drop down, travellers and companies will reap the benefits. The hospitality sector could bounce back as hotels attract more guests with affordable prices.
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What Will Change For You?
From travel to food, the GST Rationalisation plan covers almost every part of our daily lives.
- Hospitality And Travel: For business-class travellers, the flight tickets may get much cheaper, as GST could fall from 12% to 5%. Even hotel stays under ₹7,500 per night are likely to be taxed at just 5% instead of 12%, benefiting all kinds of travellers. However, economy class air travel will remain the same at 5% and hotels above ₹7,500 per night will stay at 18%.
- FMCG & Essentials: Things that families buy regularly will also get cheaper. Ghee, clothes above ₹1000, and footwear under ₹1000 are all expected to move into the 5% slab, as per the reports from CNBC TV 18. This means lower bills at shops, supermarkets, and online platforms.
The GoM has given the green signal, and now, the recommendations will be sent to the GST Council, which will make the final decision. Once the proposed changes are approved by the council, this could be the biggest GST reform since 2017. The idea is that more people and businesses will benefit, compliance will improve, and overall spending in the economy will rise.
For ordinary people, this simply means simpler taxes and lighter bills. Whether you are buying groceries or booking a hotel, the GST you pay may soon be far less complicated and a little easier on your pocket.
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