GST Council May Cut 12% Slab Items: What It Means for You
Focus Keyphrase: GST 12% slab
The GST 12% slab could soon see fewer items, as the GST Council is expected to revisit the rate structure in its upcoming meeting. This move aims to streamline the multi-rate system and potentially merge the 12% and 18% slabs — a long-standing recommendation of tax reform committees.
Why Is the 12% GST Slab in Focus?
India currently follows a four-rate structure under GST:
| GST Slab | Common Items |
|---|---|
| 5% | Essentials (food, medicines) |
| 12% | Processed food, solar equipment, household appliances |
| 18% | Services, IT products, soaps |
| 28% | Luxury goods, sin items (tobacco, aerated drinks) |
The 12% slab, while smaller in volume than 18%, creates unnecessary complexity and disputes in classification.
Expert View:
Tax consultant Rakesh Nangia noted that merging slabs will improve compliance and reduce litigation, especially for MSMEs often caught between 12% and 18% classifications.
What the GST Council May Do
In the next GST Council meeting, expected soon after Q1 collections data is analysed, the following proposals may be discussed:
- ✅ Merge 12% and 18% slabs into a uniform 15%–16% rate
- ✅ Shift items from 12% to 5% or 18%, based on revenue-neutrality
- ✅ Evaluate impact on inflation and tax buoyancy
The Council’s decision will depend on:
- State compensation balance
- Consumer price impact
- Revenue trade-off analysis
Which Items Could Be Affected?
- Solar panels and inverters
- Packaged food (like frozen vegetables)
- Sewing machines
- Sanitary napkins (previously moved to 0%, now unlikely to shift again)
- Ayurvedic and herbal products
The final decision will be notified by the CBIC through a Gazette notification under Section 9 of the CGST Act.
Past Attempts and Legal Angle
The 15th Finance Commission and Rationalisation Committee have earlier recommended a 3-slab model (5%, 15%, 28%).
This move also aligns with the Supreme Court’s view in Mohit Minerals Pvt. Ltd. v. Union of India (2022) which emphasised clarity and predictability in taxation policy under a cooperative federal structure.
Legal Reference: Any changes to GST rates are issued under Section 9(1) of the CGST Act, 2017, via Notification under the recommendation of the GST Council [Article 279A].
Impact on Businesses and Consumers
For businesses
- Invoicing may need urgent revision
- ERP or accounting software updates required
- Transitional credit planning important
For consumers
- Potential reduction or increase in prices
What Should You Do Now?
- 📌 Stay updated with GST notifications on www.cbic-gst.gov.in
- 📌 Recheck HSN codes applicable to your business
- 📌 Talk to your GST consultant or file through Efiletax GST Services
Summary for Google Snippet
The change aims to simplify the rate structure, reduce classification issues, and improve compliance.
FAQs
Q1. Will all 12% slab items move to 18%?
Not necessarily. Some may move to 5% or be retained, depending on revenue impact.
Q2. When will the change be effective?
Post-Council decision and CBIC notification, likely within the current fiscal year.
Q3. Is this part of a larger GST rate rationalisation?
Yes. A 3-rate structure is the eventual goal of GST reform.