New GST plan by Diwali: What is a GoM, how it works, and why it matters

Explainer: What the GST Council's GoM on rate rationalisation is, how it works, who its members are, and how its decisions could shape India's two-slab GST plan by Diwali 2025

India may be headed for its biggest tax reform since the introduction of the Goods and Services Tax (GST) in 2017. By Diwali (October 2025), the government hopes to roll out a simplified two-rate structure aimed at boosting consumption and ensuring long-term revenue stability.

 

According to a report by PTI, Finance Minister Nirmala Sitharaman will address a meeting on Wednesday of the Group of Ministers (GoM) on GST rate rationalisation, making a case for a new two-slab tax structure aimed at easing the burden on households and small businesses while sustaining government revenues.

 

The GoM will hold a two-day meeting in New Delhi on August 20-21, where the Centre’s proposal will be deliberated.

 

 

Here's everything known about the meeting, GoM members, tax recommendations, and more.

 

What is the GST Council?

The GST Council, set up in 2016, is the apex decision-making body on indirect taxes. The council is chaired by the Union Finance Minister and comprises representatives from all states and union territories.

 

Key features of the GST Council:

• Recommendations are made through consensus or, if necessary, by a weighted vote, where the Centre has 33 per cent and states 67 per cent of the vote share.
• The Council has empowered committees, including the GST Implementation Committee (GIC) for urgent procedural issues and the IT Grievance Redressal Committee (ITGRC) for technical glitches.
• GoMs are created to study specific issues in depth, ensuring state-level perspectives are integrated into national tax policy.

 

What is the Group of Ministers (GoM)?

The GoM is formed within the GST Council to deliberate on specific issues on the council’s recommendation. A GoM brings together state ministers who are tasked with examining complex policy matters, holding consultations, and, finally, submitting reports with their recommendations.

 

Since the launch of GST, 19 GoMs have been constituted, with six currently active, covering areas such as insurance taxation, compensation cess, and rate rationalisation, the official website states.

 

How does a GoM work?

The GST Council, chaired by the Union Finance Minister, decides to set up a GoM on specific issues.

 

Typically, six to eight ministers from different states are nominated. A convenor is appointed to lead discussions.

 

GoMs deliberate over several meetings, examine revenue data, consult with industry, and then submit interim or final reports to the Council.

 

Who are the members of the current GoM on rate rationalisation?

The GoM on rate rationalisation, constituted in 2024, is led by Bharatiya Janata Party (BJP) leader and Bihar Deputy Chief Minister Samrat Choudhary as convenor.

 

Other members include:

 

Chandrima Bhattacharya, Finance Minister of West Bengal

Party: All India Trinamool Congress (TMC).

Also holds charge of Health & Family Welfare, Land and Land Reforms, Refugee & Rehabilitation in the West Bengal government.

 

Krishna Byre Gowda, Revenue Minister of Karnataka

Party: Congress

MLA from Byatarayanapura constituency.

 

K N Balagopal, Finance Minister of Kerala

Party: Communist Party of India (Marxist)

MLA from Kottarakkara.

 

Suresh Kumar Khanna, Finance Minister of Uttar Pradesh

Party: BJP

Also holds charge of Parliamentary Affairs and Medical Education in the Yogi Adityanath cabinet.

 

Gajendra Singh Khimsar, Minister for Medical & Health Services, Rajasthan

Party: BJP

Veteran leader from Nagaur district; currently MLA from Lohawat.

 

Mauvin Godinho, Transport Minister of Goa

Party: BJP

Seven-term MLA from Dabolim constituency.

 

What is being proposed?

The Union Finance Ministry has floated a simplified GST structure:

• 5 per cent slab – “merit” goods and services, covering essentials, farm-sector items, and products widely consumed by the middle class and MSMEs.
• 18 per cent slab – “standard” goods and services.
• 40 per cent special slab – reserved for about 5–7 “demerit” items such as tobacco, pan masala, and online gaming.

 

If accepted, this would mean:

• Almost 99 per cent of goods currently in the 12 per cent slab will shift to 5 per cent.
• Nearly 90 per cent of items in the 28 per cent slab will move to 18 per cent.
• This reform would effectively eliminate the 12 per cent and 28 per cent tiers, leaving just two core slabs plus the highest permissible GST rate for select sin goods.

 

How does the GoM process work?

Deliberation at GoM: The August 20-21 meeting will focus on rate restructuring and its revenue implications.

 

Recommendation to GST Council: If consensus is reached, the GoM will submit its report.

 

Council decision: The GST Council, chaired by Sitharaman and comprising all state and UT finance ministers, will take a final call, likely in its September 2025 meeting.

 

What’s at stake?

For consumers: Lower GST on everyday items could directly ease household budgets.

 

For businesses: Fewer slabs mean lower compliance costs and reduced classification disputes.

 

For states: While there are concerns over immediate revenue impact, the Centre has argued that the simplified structure will raise collections sustainably, especially once compensation cess obligations taper off by March 2026.

 

A source told PTI, “The idea is to put forth the Centre’s viewpoint behind the GST reform proposal. Although the Centre is not a member of the GoM, the Union Finance Minister’s presence and her address will give the GoM a better understanding of the idea and thought process.”

 

The bottom line

The Centre’s push for a two-slab GST regime marks a turning point in India’s indirect tax policy.

 

This also comes as India faces increased tariffs from the United States, and ahead of the Bihar Assembly elections. Diwali is also a significant time of year for Indian consumers and the retail sector. Changes in GST could significantly boost sales during a time of geopolitical uncertainty.