New Delhi : The 56th Goods and Services Tax (GST) Council convened on Wednesday, chaired by Finance Minister Nirmala Sitharaman, to discuss a major tax overhaul that could lower prices for daily essentials and electronics while raising levies on select luxury items. The Centre’s proposal, described as a ‘next-gen’ GST reform, aims to prune the current four-tier tax structure into just two slabs—5% and 18%.
Under the plan, nearly all goods in the 12% slab and most items currently taxed at 28% will shift to lower rates, resulting in a potential price drop for several consumer products. Over 99% of goods now taxed at 12%—including staples like ghee, nuts, packaged drinking water (20-litre cans), non-aerated beverages, namkeen, medicines, and medical devices—are expected to move to the 5% category.
Electronic appliances may also become more affordable. Products like certain televisions, washing machines, and refrigerators, currently taxed at 28%, would fall under the proposed 18% bracket. While most goods are poised for a tax cut, the government plans to introduce a special 40% slab for luxury and ‘sin’ goods. High-end automobiles, SUVs, and other premium vehicles, which now attract a 28% GST plus a compensation cess, are likely to move into this new category.
Electric vehicles (EVs) have also come under the spotlight. The Centre is pushing for a 5% GST on EVs to promote adoption, even as discussions continue on whether premium EVs should face higher taxes to signal differentiation between affordable and luxury offerings. Opposition-ruled states, including West Bengal, Kerala, Tamil Nadu, Punjab, Telangana, Karnataka, Himachal Pradesh, and Jharkhand, have raised concerns about the revenue implications of these sweeping cuts.
They argue that the move could significantly dent state revenues and have demanded a clear compensation mechanism. These states are expected to hold a strategy meeting ahead of the Council session. When GST was rolled out in 2017, the Centre had agreed to compensate states for revenue loss for five years, funded through a compensation cess ranging from 1% to 290% on luxury and demerit goods.
Read Also : Yamuna Surges Past Danger Mark in Delhi, Red Alerts Issued Across India