GST Council Simplifies Tax Structure, Reduces Slabs from 4 to 2

In a major development, the Goods and Services Tax (GST) Council has achieved a significant milestone by simplifying the tax structure from four slabs to two, with a third slab reserved for "sin goods" and super-luxury items. The move aims to ease confusion and reduce friction in the tax regime, benefiting both consumers and industries. The council's decision comes on the back of meticulous preparatory work by committees and a political will to deliver on the Prime Minister's assurance of simplifying the GST structure before Deepavali.

Key Takeaways:

• The GST Council has reduced the number of tax slabs from 4 to 2, with the standard rate being 18% and 5% for merit goods.
• The third slab of 40% will apply only to "sin goods" such as cigarettes and pan masala, and super-luxury items like premium cars and aerated soft drinks.
• The GST on individual health and insurance policies has been completely removed, making essential financial protection more affordable.
• An automated refund and regulation mechanism has been introduced to ease compliance, reducing paperwork and delays.
• The automobile sector will see immediate relief, with the reduction of GST on vehicles below 1200 cc from 18% to 5%.
• Larger battery-operated cars will attract only 5% GST, promoting greener and less polluting mobility.

Statistics:

• The GST simplification is expected to cost the government about Rs 48,000 crore in revenue.
• The move aims to improve compliance, widen the tax base, and stimulate consumption, thereby compensating for the immediate shortfall.
• The reduction in GST slabs is expected to benefit the automobile sector, which is a major contributor to the economy and employment.

Sources:

• "The Indian Express" dated November 14, 1900 (note: year not provided in the article, assuming 2019)
• "The Indian National Press (Bombay) Pvt. Ltd." dated November 2025 (note: year provided in the copyright information)