9th Year of GST May Usher in Long-Awaited Rate Rationalisation
In its 9th year, GST may see rate rationalisation, though merging slabs seems unlikely due to revenue concerns and political sensitivities.
As the Goods and Services Tax (GST) enters its ninth year, stakeholders are eyeing long-anticipated reforms to the tax structure, particularly the rationalisation of tax rates. While a complete overhaul of the four primary tax slabs is unlikely, incremental changes aimed at simplifying the GST framework may be on the horizon.
Since its implementation in 2017, GST has matured into a more stable revenue system. Monthly collections have surged from an average of ₹1.2 lakh crore in the early years to over ₹1.8 lakh crore in recent months. The taxpayer base has also expanded significantly, crossing 1.5 crore registrants by the end of March 2025.
Despite this progress, tax experts and industry players continue to advocate for structural reforms. “The next phase of GST must prioritise rationalising rates, reducing blocked credits in line with the neutrality principle, broadening the tax base, and removing procedural bottlenecks,” consulting firm PwC stated in a report released Monday.
A recent Deloitte survey echoed similar sentiments, with “rationalising GST rates across the supply chain” ranking as one of the most pressing concerns for businesses.
Originally, there were discussions about merging the 12% and 18% tax slabs into a unified 15-16% category. However, the move appears politically sensitive, especially since items currently taxed at 12% may see rate hikes. On the other end, reducing the 5% slab would result in significant revenue loss—an option both the Centre and states are hesitant to consider.
As GST moves into its ninth year, stakeholders remain hopeful that the government will take the next steps toward fulfilling the original vision of a more neutral, efficient, and streamlined tax regime.
