Wed Jun 25 20:07:00 UTC 2025: ## Summary:

The upcoming GST Council meeting, likely to be held in July 2025, will address key issues including the potential minimization or elimination of the 12% tax slab and the taxation of service intermediaries. While completely abolishing the 12% slab seems unlikely, the council may consider shifting items to the 5% slab and some 18% items to the 12% slab. The taxation of service intermediaries is also a major concern, as the current 18% tax on services provided to overseas clients results in double taxation and increased costs for Indian providers. This tax exposure is estimated at ₹3,500 crore. The council is expected to consider treating these services as zero-rated to reduce the tax burden and promote foreign exchange earnings.

## News Article:

**GST Council to Mull Rate Rationalization, Service Intermediary Tax Relief**

**New Delhi – June 26, 2025:** The Goods and Services Tax (GST) Council is set to convene in July 2025 to discuss crucial reforms including the possible streamlining of tax slabs and addressing the longstanding issue of tax treatment for service intermediaries. The meeting, delayed due to location disagreements, is expected to provide significant relief to the service sector.

A key item on the agenda is the future of the 12% GST slab. While sources indicate a complete removal is improbable, the council will explore options to minimize it by moving items to the 5% slab and potentially shifting some goods from the 18% to the 12% category. Experts suggest this adjustment could reflect evolving consumer spending patterns, with items previously considered luxury goods now becoming necessities.

However, the decision to shift items to the 5% slab is not without potential drawbacks, as manufacturers may lose eligibility for input tax credits.

Another major focus is the 18% tax currently levied on service intermediaries providing services to companies abroad. Industry representatives argue this results in double taxation and inflates costs for Indian service providers. The issue is estimated to involve a tax exposure of around ₹3,500 crore.

“The current framework continues to tax intermediary services even when rendered to overseas clients, leading to a double whammy,” explained Manoj Mishra, Partner at Grant Thornton Bharat.

The council is expected to consider treating these exports as zero-rated supplies, aligning with international practices and boosting India’s foreign exchange earnings.

The outcome of the GST Council meeting is keenly anticipated by businesses across various sectors, as the decisions made will have a significant impact on tax compliance and the overall economic landscape.

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