India to abolish 28% GST slab, shift most items to 5% from Oct

Prime Minister Narendra Modi unveiled India’s most ambitious tax reform in eight years, announcing a broad revamp of the goods and services tax regime that slashes consumption levies on everyday goods and small cars from October. The plan abolishes the top 28% slab and shifts a large portion of items from the 12% category to the 5% tier, promising lower prices for shoppers and a boost to manufacturing. The government warned that the reform will weigh on revenues in the near term, estimating an annual drain of about 20 billion, even as economists expect a modest improvement in growth. The move comes as Modi seeks to shore up domestic demand while navigating a tense period in trade relations with the United States.

Under the proposed changes, the complex GST structure, which since 2017 has unified state and central levies into a single nationwide regime with multiple slabs, would be simplified further. By removing the 28% slab—the tier that covers many luxury and higher‑end items—the government would reallocate those taxes to lower brackets. In tandem, nearly all items currently taxed at 12% are slated to move to the 5% category, broadening price relief for a wide range of...