Updated on: Aug 18, 2025 03:51 pm IST
The 5% slab contributes around 7% to total GST revenues, while the 18% slab accounts for a dominant 65%. The 12% and 28% slabs contribute 5% and 11%.
The 18% tax slab is expected to remain as the biggest contributor to India’s GST revenue if the Narendra Modi government’s proposal for a two-tier GST rationalisation is implemented by Diwali, people aware of the matter told the Press Trust of India.
“The 18% slab will continue to account for a lion’s share in GST revenue as per the Centre’s proposal,” one of the persons said. “We expect volumes to go up and a consumption boost which will help improve the GST revenue from the current level.”
Once the goods and services are categorised as merit and standard, 99% of the items in the 12% bracket will move to 5%, with the remaining moving to 18%. Also, 90% of the goods and services in the 28% bracket will move to 18%.
Only 5-7 items, the so-called “sin goods” will go into the the new 40% slab.
India’s Goods and Services Tax, first implemented on 1 July 2017, follows a four-tier structure with rates of 5%, 12%, 18%, and 28%. Food and essential items are either exempt or taxed at 5%, while luxury and the so-called sin goods attract the highest rate of 28%.
The 5% slab contributes around 7% to total GST revenues, while the 18% slab accounts for a dominant 65%. The 12% and 28% slabs contribute 5% and 11%, respectively, to monthly GST collections.
The central government has proposed to the Group of Ministers on GST rate rationalisation a two-tier rate structure of 5% and 18% for “merit” and “standard” goods and services, and a 40% rate for about 5-7 goods. The proposal entails doing away with the current 12% and 28$ tax slabs.
According to government data, the average monthly GST collections have risen from ₹1.51 lakh crore in FY22 to ₹1.84 lakh crore in FY25. The indirect tax has a total of 1.51 crore taxpayers as against 65 lakh in 2017.
