Finance Minister Nirmala Sitharaman was set to address group of ministers (GoM) in a key meeting here on Wednesday, where upcoming reforms to the Goods and Services Tax (GST) structure are to be deliberated upon.

The Finance Ministry has put forth a proposal about a simplified, two-tier Goods and Services Tax (GST) system with a "standard" and "merit" slab, alongside special rates for select goods. The Centre has suggested a simpler two-tier GST rate structure of 5 per cent and 18 per cent, while keeping a 40 per cent special rate for a few demerit goods.

The proposal seeks to remove the current 12 per cent and 28 per cent slabs, aiming to make goods cheaper for consumers.

According to government sources, although the Centre is not a member of the GoM, the Finance Minister’s address at the two-day GoM meeting will provide the GoM a better understanding of the thought process.

The two-day meeting will be led by Bihar Deputy Chief Minister Samrat Choudhary, the convenor of the six-member panel which is expected to deliberate on the Union government’s plan to move to a simplified two-slab GST structure.

The proposed system would classify goods into two broad categories — ‘Merit’ goods (5 per cent) with items benefiting the middle class, MSMEs and farmers and ‘Standard’ goods (18 per cent), constituting most other goods and services.

The highest permissible slab of 40 per cent will be reserved for around 5-7 demerit items, such as pan masala, tobacco, and online gaming.

Nearly 99 per cent of items in the 12 per cent slab could move to 5 per cent once the GST rate rationalisation is done.

The GST Council is expected to meet on September 18-19 to take a final call on the proposal.

The government’s proposal, aligned with Prime Minister Narendra Modi’s Independence Day announcement of “next-gen GST reforms before Diwali,” is built on three pillars: structural reforms, rate rationalisation, and ease of living.