The Goods and Services Tax (GST) Council is set to meet soon to conduct a comprehensive review, with key focus areas including reducing tax rates on consumer-facing items currently in the 12% bracket, according to The Times of India.
One of the major proposals under consideration is the elimination of the 12% GST slab entirely. While other options are being evaluated, this move aims to simplify the rate structure, though the final decision will need to balance consumer relief with revenue implications. Sources indicate that while some consumer items could see lower taxes, goods primarily used by businesses may face a marginal increase.
Items such as air conditioners, which currently fall under the highest tax slab, may also see a reduction to ease the burden on consumers.
An important part of the discussion is the upcoming expiry of the GST compensation cess in March 2026. This cess was introduced to compensate states for revenue losses during the transition to GST. With its end approaching, the Council is expected to finalise a plan to continue imposing a cess on “sin goods” such as tobacco, ensuring states are not left with a revenue gap.
The Centre is also pushing for significant relief in the insurance sector. Pure term insurance plans, currently taxed at 18%, may be moved to the nil tax bracket, although insurance companies are lobbying for a 12% rate. The decision on health insurance is still pending, but some relief is expected for policyholders.
