New Delhi: In a move aimed at easing the financial burden on middle and lower-income households, the Central government is reportedly planning a major restructuring of the Goods and Services Tax (GST) framework. According to sources, the government is considering eliminating the 12% GST slab entirely or shifting a large number of items currently taxed at 12% to the lower 5% bracket. This step is expected to make a wide range of everyday products significantly cheaper for the average consumer.
Items under consideration for GST reduction include personal care products like toothpaste and tooth powder, kitchen appliances such as pressure cookers and electric irons, and household goods like umbrellas, sewing machines, geysers, and water purifiers. Other essentials such as bicycles, readymade garments priced above ₹1,000, footwear between ₹500 and ₹1,000, stationery items, agricultural tools, and certain vaccines and diagnostic kits may also become more affordable under the new tax structure.
This proposal follows earlier income tax concessions announced by the Centre and is part of a broader strategy to boost consumption by reducing the cost of essential goods. Government estimates suggest the change could cost the exchequer between ₹40,000 crore and ₹50,000 crore initially. However, officials believe the long-term benefits will outweigh the short-term revenue loss, as lower prices are likely to increase demand and, consequently, expand the GST tax base.
Finance Minister Nirmala Sitharaman has recently signaled the government’s intent to simplify and rationalize GST slabs. In a recent interview, she indicated that efforts are underway to make the tax system more equitable and easy to comply with, especially for goods that are regularly used by middle-class families. The restructuring is seen as a step toward achieving a simpler, more inclusive tax regime.
However, the proposal faces resistance from several states. As per GST Council rules, changes in tax rates require approval from the Council, which consists of representatives from all states and Union Territories. States like Punjab, Kerala, Madhya Pradesh, and West Bengal have reportedly expressed reservations. Historically, the Council has preferred consensus-based decision-making, with voting used only once since the inception of GST in 2017. The issue is expected to be discussed at the 56th GST Council meeting, likely to be convened later this month after a mandatory 15-day notice.
Currently, the 12% GST slab includes a wide range of goods that are not classified as luxury items but are still taxed higher than basic necessities. These include hair oil, soaps, low-capacity washing machines, carriages for disabled persons, some garments and footwear, most vaccines, geometry boxes, glazed tiles, solar water heaters, and some packaged foods. Moving these to a lower tax bracket would provide substantial savings for households and potentially stimulate growth in manufacturing and retail sectors.
If approved, the proposed changes could be a major relief for the middle class and serve as a strategic economic stimulus. As the government pushes forward with this plan, all eyes are now on the upcoming GST Council meeting where the final decision may be made.
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