PMO Clears Proposal for GST Framework Revamp; All Eyes on Upcoming Council Meet

The Prime Minister’s Office (PMO) has given an in-principle nod for a comprehensive reform of the Goods and Services Tax (GST) framework. This sets the stage for what could be the first major restructuring of the indirect tax regime since its launch in 2017.

The finance ministry is now initiating talks with states and key ministries to develop consensus before the proposal is tabled at the upcoming GST Council meeting, likely to be held after the monsoon session of Parliament, as per The Economic Times report.

GST Revamp: What’s on the Table?

The overhaul will likely focus on 2 main areas:

• Slab Rationalisation: Proposals being discussed include eliminating the 12% slab and redistributing its items into the 5% and 18% categories. This is expected to simplify the rate structure for both consumers and businesses.
• Procedural Simplification: Measures aimed at easing compliance and reducing administrative burden are also under review, as part of efforts to streamline the GST ecosystem.

Consensus Building with States

Since the GST is jointly administered by the Centre and states, the finance ministry will begin outreach efforts to build political agreement on the proposed reforms. Inter-ministerial consultations have already started, signalling a coordinated push to make the overhaul inclusive and implementable.

Industry and Political Push for Change

Industry groups have long raised concerns about the complexity of the GST regime, citing issues such as multiple tax slabs and compliance hurdles. Lawmakers across party lines have also echoed these concerns, urging the government to take corrective action.

Currently, the GST structure includes 5 principal tax slabs including nil, 5%, 12%, 18%, and 28%, along with special rates of 0.25% and 3% for bullion. Notably, around 21% of goods fall under the 5% slab, 19% under 12%, and 44% under 18%. The highest 28% rate applies to just 3% of items.

Possible Economic Impact

As per the report, policymakers believe that a simpler, more efficient GST system could spur consumption and investment by lowering the compliance burden and bringing clarity to the tax structure. The long-awaited reform is also expected to provide relief to end consumers through more consistent pricing.

Read More: How Has GST Reshaped the Business Landscape of India?

Conclusion

The PMO’s green light for GST reform signals the government’s intent to revisit and refine one of its most transformative tax policies. With the GST Council expected to weigh in this August, businesses and taxpayers alike are watching closely. If implemented well, the proposed revamp could mark a significant shift towards a more transparent and business-friendly tax environment.

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