TNR News Network
SHIMLA:
In a significant overhaul of the Goods and Services Tax (GST) structure, the Centre has streamlined the existing four-slab system to just two primary slabs — 5% and 18%.
In a move seen as beneficial for the common man, the GST Council has also introduced a new 40% slab exclusively for sin goods and luxury items, such as high-end vehicles and premium products.
While the reform aims to simplify the tax structure and bring relief to everyday consumers, it has also triggered concern among several states, especially Himachal Pradesh, which expects a revenue loss of Rs 1,000 crore due to the changes.
GST reshuffle brings relief to consumers
The new tax framework, which takes effect from September 22, 2025, eliminates the 12% and 28% slabs and merges most items into either 5% or 18%. According to the GST Council, the decision will make the taxation system more straightforward and reduce the burden on the average citizen.
Out of 190 items reviewed, a large number have shifted to lower tax brackets. The 40% slab, however, will now be applicable on goods considered non-essential or indulgent.
Industry leaders and consumer groups have welcomed the move, citing lower costs and simplified compliance.
Himachal warns of revenue shortfall
Despite the consumer benefits, the restructured slabs have raised alarms among state governments. Himachal Pradesh Industry Minister Harshwardhan Chauhan has confirmed that the state may face a loss of over Rs 1,000 crore due to decreased tax inflows.
“The restructuring is people-friendly, but it affects the state’s fiscal health. Himachal already struggles with limited resources and disaster-related losses,” said Harshwardhan Chauhan. He revealed that Himachal CM Sukhvinder Singh Sukhu has reached out to Union Finance Minister Nirmala Sitharaman, requesting financial compensation to bridge the shortfall.
States unite in demand for compensation
Harshwardhan Chauhan noted that non-BJP-ruled states are formally demanding compensation from the Centre. While BJP-ruled states have been more restrained in public criticism, internal dissent regarding revenue concerns is believed to be widespread.
Himachal’s economic situation is further worsened by repeated natural disasters, including floods and landslides. In 2023 alone, the state reported Rs 10,000 crore in losses, receiving only Rs 1,500 crore in central aid. This year, fresh calamities have added another Rs 3,500 crore to the tally.
“The Centre must recognise Himachal as a disaster-affected state and release special funds immediately,” Harshwardhan Chauhan urged.
