The center's two-rate GST proposal gets approval from the Group of Ministers

Current Context: On August 21, 2025, the Group of Ministers (GoM) on GST rate rationalisation approved the Centre’s proposal to simplify the Goods and Services Tax (GST) structure.

• The plan replaces the current four-tier system (5%, 12%, 18%, 28%) with two standard rates: 5% and 18%, while sin and luxury goods will attract a 40% rate.
• Nearly 99% of items under the 12% slab will shift to 5%, and 90% of items under the 28% slab will move to 18%.
• The proposal aims to reduce complexity, improve compliance, and boost consumption.
• Final approval will be taken up by the GST Council in its upcoming meeting in September 2025.

Question:

Q.1 As per the proposal approved by the GoM on August 21, 2025, what will be the new standard GST rates?
a) 5% and 12%
b) 5% and 18%
c) 12% and 18%
d) 0% and 28%

Answer: b) The current four-tier GST structure (5%, 12%, 18%, 28%) will be simplified to two standard rates of 5% and 18%.