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India GST rate consolidation in doubt

Election result means consolidation of 12% and 5% Goods and Services Tax rates likely delayed

Following the ruling BJP party failing to secure a majority in this months national general election, India’s GST Committee is unlikely to revisit the consolidation of the country’s five rates to four (inc 0%), with the removal of the 12% rate. This follows strong receipts of GST in the first half of 2024 so far.

India has been toying with the reform for almost two years; the last failed attempt was in February as part of the 2024 Finance Bill.

Five GST rates into four

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, There are also discussions to bring fuel into the GST net.


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