India is getting ready for a major change in the Goods and Services Tax (GST). The Group of Ministers (GoM) has agreed to reduce the number of tax slabs, making GST simpler and easier for everyone.

Right now, GSTis charged at four rates, 5%, 12%, 18% and 28%. Under the new plan, there will be only two main slabs, 5% and 18%. The 12% and 28% rates will be scrapped.

Almost all items that were earlier taxed at 12% will now move to the lower 5% slab, making them cheaper.Similarly, about 90% of goods under the 28% slab will be shifted to the 18% category, also reducing their prices.However, a higher 40% tax will continue to apply only to “sin goods” such as tobacco and certain luxury items like big cars.

This means most goods, including medicines, processed food, clothing, footwear, and household items, will cost less as they move to the 5% slab. Big appliances, TVs, and durable goods will now be taxed at 18% instead of 28%, making them more affordable for middle-class families.

Finance Minister Nirmala Sitharaman said this change will help the common man, farmers, the middle class, and small businesses (MSMEs) by lowering their tax burden and making the system simpler.

The GoM also discussed exempting health and life insurance premiums from GST. If approved, people will not have to pay GST on their insurance policies. However, states want to make sure that insurance companies pass on the benefit to customers instead of keeping prices the same.

These recommendations will now be sent to the GST Council, headed by the Union Finance Minister and state representatives. The final decision will be taken in the next Council meeting. If approved, this will be one of the biggest GST reforms since 2017, making the tax system simpler and giving direct relief to consumers.