Prime Minister Narendra Modi in his Independence Day speech on 15th August, announced that a mega GST (goods and services tax) reform would be unveiled soon, calling it a Diwali gift for the countrymen. Later, the government issued a detailed release outlining GST rate rationalisation and reforms.
Essentially, the government is looking at having most goods under two slabs, 5% and 18% – standard and merit. Special rates will apply only for a select few items.
Meanwhile, there have been lots of speculations in the media around the GST rate rationalisation matter, prompting the Central Board of Indirect Taxes and Customs to issue a cautionary advisory for the public and media outlets spreading “premature” speculation.
In a post on the social media platform ‘X’, the CBIC wrote, “It is kindly requested that speculation on GST rates may be avoided. Decisions in this regard are taken collectively by the GST Council which comprises of the Centre and States.”
It further said that premature speculation gives rise to “baseless rumours and may cause volatility in the markets”.
“All stakeholders are advised to kindly await the official announcements which will be made after the GST Council meeting scheduled on 3rd and 4th September, 2025,” the CBIC said in its post.
GST Council meeting on September 3 and 4
The all-powerful GST Council will meet on September 3 and 4 to discuss the proposals sent by the Group of Ministers (GoM) on GST rate rationalisation. Last week, GoM Convenor and Bihar Deputy Chief Minister Samrat Choudhary confirmed that the GoM approved the Centre’s two-slab GST structure proposal and the same would now be reviewed by the GST Council.
Currently, the GST structure has multiple slabs – 5%, 12%, 18% and 28% – along with a compensation cess from 1% to as high as 290% on select items and luxury goods like cars, refrigerators, air conditioners, pan masala, tobacco and cigarettes.
GST exemptions likely on life and health insurance premiums
The GoM Convenor also said that the GoM is in favour of completely exempting the GST on health and life insurance premiums in the revamped regime.
The Centre’s proposal to exempt insurance premiums from GST levy is part of the overall next-Gen GST reform. The plan is to have only two rates 5% and 18% for most items and scrap 12% and 28% GST slabs.
Now, it is up to GST Council to take a final call on the rate rationalisation in its meeting on September 3 and 4, 2025.