The Group of Ministers on GST rate rationalisation, that includes all state finance ministers of India, on Thursday accepted the Centre's proposal to move to a two-slab structure of 5 and 18 per cent by scrapping slabs of 12 per cent and 28 per cent.

Bihar Deputy Chief Minister Samrat Choudhary, who is the convenor of rate rationalisation GoM, said the six-member state ministerial panel has also accepted the proposal of removing the 12 and 28 per cent slabs.

While talking to the media Choudhary said, "Both the proposals of the Centre have been accepted by the GoM on rate rationalisation." Meanwhile, Uttar Pradesh Finance Minister Suresh Kumar Khanna stated that the Centre's proposal also includes levying 40 per cent tax on ultra luxury and sin goods.

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TMC pitches for levy on top of 40% on sin goods 

West Bengal Finance Minister Chandrima Bhattacharya emphasised that her state has proposed a levy on top of the 40 per cent GST rate so that the current tax incidence on ultra luxury goods, like cars, and sin goods, is maintained.

Reasoning behind the demand, Bhattacharya said the Centre's proposal did not mention the revenue loss that would accrue to both, the Centre and the states, once the new two-slab structure is implemented.

Prime Minister Modi, on August 15, announced a double gift to citizens on Diwali with a major GST reform. A few hours later, the Finance Minister put forward a proposal to scrap the 12 per cent and 28 per cent slabs from the current four-tier structure in favour of the people and make it a two-tier structure with only 5 per cent and 18 per cent slabs.

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According to the FM proposal, 99 per cent of the goods in 12 per cent slab will be accomdated in 5 per cent slab whil 90 per cent of the goods in 28 per cent slab will be clubbed in 18 per cent slab. Apart from that a 40 per cent tax on utra luxury and sin goods like tobacco products has also proposed.