GST Rate Cut Likely: Check List of Everyday Items That May Get Cheaper as 12% Slab Faces Elimination

New Delhi: In what could be a major economic relief for India’s middle- and lower-income households, the Central government is reportedly considering a significant restructuring of the Goods and Services Tax (GST) system that may eliminate the 12% tax slab entirely. According to government sources, several essential consumer goods currently taxed at 12% may soon be moved into the lower 5% GST bracket, substantially reducing prices for end consumers.

The potential decision, which would mark one of the biggest overhauls of the GST regime since its rollout in 2017, is expected to be taken up at the 56th GST Council meeting later this month. The GST Council, chaired by the Union Finance Minister and comprising state finance ministers, is responsible for proposing changes to indirect tax rates.

The move is likely to impact a wide range of daily-use items—particularly those consumed by middle-class and economically weaker sections of society. These include tooth powder, hair oil, soaps, certain branded toothpaste, umbrellas, sewing machines, pressure cookers, electric irons, geysers, small washing machines, and footwear priced between ₹500–₹1,000.

In addition, items such as carriages for disabled persons, diagnostic kits for diseases like HIV and TB, most vaccines, Ayurvedic and Unani medicines, and educational materials like drawing books and geometry boxes are also under review for tax reduction.

The government’s rationale for the proposed shift is twofold: to ease the burden of inflation on essential goods and to streamline the GST structure by merging the 12% slab into the broader framework. Under the proposed model, items previously under the 12% rate would be reclassified into either the 5% or 18% slabs, depending on their nature and economic relevance.

This reclassification is also seen as politically strategic, with several key state elections scheduled for later this year. Making widely used items more affordable could be positioned as a pro-people economic reform, particularly appealing to urban and semi-urban voters feeling the pinch of rising prices.

While the final list of items likely to move to the 5% slab is still under deliberation, industry experts believe the move could have a positive ripple effect on consumption. For businesses, however, it may require adjustments in pricing strategies and tax compliance systems, depending on where their products fall in the revised categorisation.