<h1>Centre proposes GST cut to two main slabs (5% and 18%) plus 40% on select goods, preserves equal revenue sharing</h1> Under the current GST framework, central and subnational governments share tax revenues equally, with 41% of the central divisible pool allocated to subnational governments per finance commission recommendations; subnational authorities retain exclusive taxation over land and petroleum. The central government has proposed reducing GST to two main slabs (5% and 18%) plus a 40% rate on a few items, eliminating existing 12% and 28% slabs, and anticipates higher consumption-driven revenues and improved tax buoyancy over time. Compensation cess, originally for a five-year transition and later extended to March 31, 2026, funds state compensation and loan repayments; the centre provides long-term interest-free capital grants/loans to subnational units.