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India GST rate consolidation 2025

India delays consolidation of 12% and 5% Goods and Services Tax rates

India’s 2024 Finance Bill has put an end to speculation of a 2024 simplification of the Goods & Services Tax (GST) rates. The Bill, which is now in the Lower House of parliament, has committed to the same 5-rate structure for this year. The long-waited reforms will therefore not appear until 2025.

India’s Goods and Services Tax Council was reviewing simplifying the number of GST rates from five to four. This would likely mean the withdrawal of the current secondary main rate of 12%.

Five GST rates into four in 2025?

The current rates are:

  1. 28% – vehicles; fizzy drinks; air conditioners; nightclub entrance; luxury hotels and restaurants, and gambling
  2. 18% main rate applying to over 450 defined goods and services, including luxury restaurants and hotels
  3. 12% second main rate applying to over 250 defined goods and services including other hotels and restaurants; non-dwelling construction
  4. 5% – passenger air travel; construction of dwellings; restaurants
  5. 0%

There are also a precious stones (0.25%) and metals (3%) rates. Sign-up for VAT Calc’s FREE global VAT and GST news e-mail updates.

This is likely to be cut to four rates, as follows:

  • 28% luxuries
  • 18% main rate
  • 5% reduced rate
  • 0%

The disruption caused by COVID-19 prevented an earlier consolidation. India implemented GST in 2017, and it just hit its fourth anniversary. There are also discussions to bring fuel into the GST net.


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