The GST Council meeting to be held in New Delhi on 12 July 2025 is expected to be a big relief for the middle and low income group. The government is reviewing the eight -year -old Goods and Services Tax (GST) system. There is a plan to reduce tax on everyday things coming in 12% tax slab. These include butter, ghee, processed food, mobile phones, fruit juice, pickle, jam, coconut water, umbrella, bicycle, toothpaste, shoes and clothes. Also, it is proposed to reduce taxes on high -grade items such as air conditioners.
The government is considering to completely eliminate 12% tax slab, which can lead to many things in 5% slab. This will make these items cheaper. However, taxes may increase on some business products so that revenue loss is reduced. The government believes that by reducing tax, consumer demand will increase, which can compensate for revenue in a long time.
The proposal to up to 12% tax on health insurance and net term insurance schemes in GST Council is also under discussion. This will reduce the burden of insurance policy holders. Insurance companies have demanded this, but the final decision has not been taken yet.
The compensation cess imposed to compensate the states to compensate for revenue loss will end in March 2026. Instead, the government is planning to impose new cess on harmful items like tobacco.
This meeting headed by Finance Minister Nirmala Sitharaman has emphasis on permanent tax system, so that traders and consumers get clarity. However, states like Punjab, Kerala, Madhya Pradesh and West Bengal are opposing tax deduction due to fear of revenue loss. This meeting can be relieved for the middle class, but the consent of the states is necessary.
