New Delhi, Aug 15 (PTI) The finance ministry on Friday said it has proposed a two-slab GST rate structure to the Group of Ministers (GoM), along with special rates for select items.

Prime Minister Narendra Modi in his 79th Independence Day has announced that GST reforms which will lower tax burden substantially and benefit small industries will be implemented by Diwali.

Soon after the announcement, the finance ministry said the Centre's proposal shared with the GoM rests on three pillars -- structural reforms, rate rationalisation and ease of living.

The proposal includes reduction of taxes on common man items and aspirational goods.

With regard to reduction in slabs, the Centre has proposed moving towards simple tax with two slabs -- standard and merit. Special rates would apply only on select few items.

Currently, GST is a 4-tier structure of 5, 12, 18 and 28 per cent.

The GST Council, chaired by Finance minister Nirmala Sitharaman and comprising state ministers, is expected to meet in September to discuss the GoM proposal on rate rationalisation.

The ministry said the end of compensation cess has created fiscal space, providing greater flexibility to rationalise and align tax rates within the GST framework for long-term sustainability. PTI JD HVA

Two-slab GST rate structure proposed to simplify taxation, with special rates for select goods enabling rate rationalisation. The finance ministry proposes a two-slab GST rate structure-standard and merit-with limited special rates for select goods, aiming to replace the current four-tier framework to simplify taxation on common-man and aspirational items. The proposal ties rate rationalisation to fiscal space arising from the end of the compensation cess and envisages consideration by the GST Council following GoM recommendations, combining structural reforms, rate alignment and measures to improve taxpayer ease.