GST Council Likely to Discuss 12% Slab

Context:

The Goods and Services Tax (GST) Council is expected to convene in July 2025 after a gap of over six months, with major reforms on its agenda, according to official sources. The Council, chaired by the Union Finance Minister and comprising state finance ministers, plays a key role in shaping India’s indirect tax policy.

Key Highlights

• 12% GST Slab Under Review:
  • The Council will deliberate on reducing or eliminating the 12% tax slab to simplify the existing four-tier GST structure (5%, 12%, 18%, and 28%).
    • Internal recommendations suggest subsuming the 12% slab into either the 5% or 18% category.
    • The move aligns with long-standing goals of rate rationalisation and simplification.
• Relief for Service Intermediaries:
  • Final clarity is expected on the tax treatment of service intermediaries, which has long been a source of compliance disputes and litigation.
    • Resolution could bring relief to sectors such as outsourcing, fintech, and consulting, with potential benefits running into thousands of crores.
    • This may include redefining place-of-supply rules or clarifying tax applicability on exports of intermediary services.

Implications

• Simplification of GST slabs would reduce classification disputes and improve ease of doing business.
• Clarifying tax on intermediaries will help exporters and global service providers, enhancing India’s competitiveness.

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