GST Council Begins Two-Day Meeting
The GST Council kicked off its two-day meeting on September 3, 2025, with the Centre’s ambitious proposals to rationalise tax slabs at the top of the agenda. The Union government has pitched the move as a way to reduce tax incidence, simplify compliance, and provide relief to the common man.
Key Proposals: Fewer Slabs, New 40% Rate
The proposals, first announced by the Centre on Independence Day, aim to reduce the number of GST rates by:
- Eliminating the 12% and 28% slabs.
- Retaining the 5% and 18% slabs.
- Phasing out the Compensation Cess.
- Introducing a new 40% slab for luxury and sin goods.
According to sources, nearly 99% of items in the 12% category would shift to 5%, while 90% of items in the 28% category would drop to 18%. The remaining items in the 28% slab — largely luxury and sin goods — would move up to the new 40% slab.
Centre Says ‘Common Man Will Benefit’
Government officials claim the proposed GST rate cuts will directly benefit students, women, farmers, and the middle class. Items of daily use are expected to get cheaper, while even aspirational goods could see lower taxes.
The Centre has not shared the expected revenue impact, but economists estimate annual losses between ₹60,000 crore and ₹1.8 lakh crore if the changes are implemented.
States Express Revenue Concerns
Eight non-BJP ruled states — Himachal Pradesh, Jharkhand, Karnataka, Kerala, Punjab, Tamil Nadu, Telangana, and West Bengal — have voiced strong concerns. Finance Ministers from these states met in New Delhi last week and drafted a note warning of a sharp revenue shortfall if the proposals are passed.
They also submitted their own suggestions on how the Centre could safeguard state revenues, which will be discussed during the meeting.
TDP Backs Centre’s Proposals
Meanwhile, the Telugu Desam Party (TDP), which governs Andhra Pradesh and is part of the ruling NDA at the Centre, has extended full support to the Union government’s plans.
“As an alliance partner, we are supporting the Centre’s proposal of GST rate rationalisation. It is in favour of the common man,” said Andhra Pradesh Finance Minister Payyavula Keshav ahead of the meeting.
What’s Next for GST Reform?
The outcome of the GST Council’s deliberations will be closely watched, as any move to cut slabs and simplify procedures could reshape India’s tax structure. While the Centre is betting on long-term benefits for citizens, states remain cautious about the immediate revenue impact.
