GST Council Set to Discuss Reducing Items in 12% Slab
The Goods and Services Tax (GST) Council is expected to deliberate on rationalising items in the 12% tax slab during its upcoming meeting. The move is part of a broader push to simplify India’s four-rate GST structure and address long-standing demands for a more streamlined tax regime.
Why the Focus on the 12% GST Slab?
The 12% slab, considered a mid-tier rate between the lower (5%) and higher (18% and 28%) brackets, includes a wide range of goods and services. Over time, experts and industry bodies have argued that rationalising this slab could improve compliance, reduce classification disputes, and boost economic efficiency.
By potentially merging or redistributing items in this category, the Council hopes to simplify tax administration without significantly impacting revenue.
What Could Change?
While specific items under consideration haven't been officially disclosed, the GST Council may:
Shift some goods to the 5% or 18% slabs, based on essentiality and revenue impact.
Reduce classification overlaps by aligning items with similar products already in other slabs.
Consider sector-specific recommendations from industries such as textiles, FMCG, and manufacturing.
Background: India’s Four-Tier GST System
India currently follows a four-rate GST system: 5%, 12%, 18%, and 28%, plus a cess on luxury and sin goods. The 12% slab accounts for a significant but shrinking share of total GST revenues, with the bulk now coming from the 18% category.
Efforts have been ongoing to collapse slabs and simplify the regime. This proposal is seen as a step toward eventually moving to a three-rate structure, as recommended by various expert committees.
Expected Benefits of Rationalisation
Simplified compliance for businesses, especially MSMEs
Fewer tax disputes due to clearer product classification
Improved ease of doing business
Revenue neutrality if executed with care
Greater consumer clarity on pricing
Concerns and Industry Watchpoints
Price impact on goods that shift to a higher slab
Temporary disruption in accounting or supply chain adjustments
Sector-specific lobbying expected from industries that may be affected negatively
Frequently Asked Questions (FAQs)
Q1: What is the 12% GST slab?
It is one of the four primary GST tax rates in India, applied to goods and services that fall between essential and luxury categories.
Q2: Why is the GST Council reviewing this slab now?
To simplify the tax structure, improve compliance, and reduce disputes arising from classification confusion.
Q3: Will this change increase consumer prices?
It depends. If items are moved to a higher slab (18%), prices may rise. If shifted to 5%, they may fall.
Q4: Is this part of a larger tax reform?
Yes, it aligns with the long-term goal to move toward a simplified three-rate GST system.
Q5: When will the GST Council make a decision?
The matter will be discussed in the upcoming GST Council meeting. Final decisions will follow deliberation and consensus.
Published on: June 26, 2025
Uploaded by: PAVAN
www.vizzve.com || www.vizzveservices.com
Follow us on social media: Facebook || Linkedin || Instagram
🛡 Powered by Vizzve Financial
RBI-Registered Loan Partner | 10 Lakh+ Customers | ₹600 Cr+ Disbursed