The central government is set to overhaul the Goods and Services Tax (GST) regime by Diwali this year, introducing a simplified two-rate structure of 5% and 18% along with a special 40% tax on select luxury and sin goods, highly placed sources said.Currently, GST rates are spread across multiple slabs — nil or zero per cent on essential food items, 5% on daily-use goods, 12% on standard products, 18% on electronics and services, and 28% on luxury and sin goods. Under the proposed framework, the 12% slab will be eliminated, with 99% of items in that bracket moving to the 5% category. Likewise, nearly 90% of goods and services taxed at 28% will shift to the 18% rate. The special 40% rate will apply to only seven items, including tobacco, with the total tax incidence on tobacco products remaining at the current 88% through additional cesses and levies. Since its rollout on July 1, 2017, the current GST system has seen the highest revenue — about 65% — coming from the 18% slab. The 28% top bracket has contributed around 11% of collections, while the 12% slab has accounted for just 5% and the 5% rate for 7% of total GST revenues.