NEW DELHI: The GST Council is set to consider a sweeping rationalisation of tax rates when it meets on September 3–4, with proposals ranging from reducing levies on cement and mass-consumption services to moving all food and textile products into the 5% slab, sources told TOI.
Major Proposals on the Table
- Food & Textiles: All products under these categories may be uniformly placed in the 5% slab, ending disputes over classification.
- Cement: Levy could be cut from 28% to 18%, addressing a long-pending demand from the construction and infrastructure sectors. The reduction is expected to ease costs for consumers, though officials stressed that benefits must be passed on by an industry often accused of cartelisation.
- Services: Mid- and high-end salons and beauty parlours, currently taxed at 18%, may see rates lowered to 5%, while small salons remain exempt.
- Insurance: Individual life and health insurance premiums could be made tax-free, a move aimed at boosting coverage and penetration.
Fewer Slabs, Simpler Regime
The Centre is pushing for a streamlined GST structure with three effective slabs—5% and 18% for most goods and services, and 40% for a few luxury and sin items. Cars up to 4 metres in length would attract 18%, while bigger vehicles would fall in the 40% bracket (down from the current effective 50%).
Officials said the government does not want thresholds or complex classifications. “When GST was introduced, rates were kept revenue-neutral. After eight years of experience, it’s time to move to a simpler structure balancing consumer and exchequer interests,” a senior official said.
Some states, including West Bengal, have sought an increase in the GST ceiling beyond 40%, but the Centre believes such a move would send the wrong signal and require major legal amendments.
