The GST Council on Wednesday approved a two-tax slab structure, scrapping the 12 percent and 28 percent rates, in what is described as a "structural reform" of India's consumption tax since its launch in 2017. Taxes on several essential goods such as household items, medicines, small cars, and other appliances will be slashed, while 'sin items' will face higher levies.
Union Finance Minister Nirmala Sitharaman announced the changes after a marathon meeting of the 56th GST Council. She said, "All decisions were taken unanimously, with no disagreement from any state."
Further talking about the big move, Sitharaman explained, "The reform is not only about lowering rates. It's also on structural reforms and for ease of living. We have corrected the inverted duty structure problems. We have resolved classification-related issues, and we have ensured that there is stability and predictability about the GST."
About 90 percent of goods are set to become cheaper as the GST structure of four slabs will primarily fall into two main rates of 5% and 18%, with another 40 percent tax levied on luxury and sin goods.
What's getting cheaper for you?Calling it an item-wise rigorous exercise, Sitharaman stated, "Labour-intensive industries have been given support. Farmers and agriculture, as a whole, will also benefit from the decision we have taken today. Health-related sectors will also benefit. So, the key drivers of the economy have been given prominence."
Here is a list of items that are getting cheaper this Navratri, from September 22:
Many items of daily use and essential medicines will fall in the zero GST line. Along with this, ultra-high pasteurized milk, pre-packaged paneer, Indian breads including roti, chapati, khakhra, and pizza bread, among others, lying in the 5-18% tax rates, will also be reduced to 0%.
The life-saving drugs, including Agalsidase Beta, Daratumumab, Eptacog alfa, Imiglucarese, and Inclisiran, among others, will now be tax-free. Tax on other medicines and drugs, as well as medical devices and equipment, will be reduced from 18% or 12% to 5%.
Agriculture and Industry, food and beverages, household and personal items, handicrafts and textiles, transport and mobility, and other categories of marble and granite blocks, bio-pesticides, and renewable energy devices will also fall under the 5% tax slab.
Air conditioners, TVs, small cars, buses, trucks, ambulances, auto parts, and cement will now fall under the 18% slab.
All education supplies, earlier falling between 5-12% have been moved to nil.
As mentioned above, the 40% category will include luxury goods or sin items, i.e., pan masala, caffeinated beverages with added sugar (non-alcoholic), personal use aircraft, yachts, and all the tobacco products excluding beedi.
​Concluding the meeting, Sitharaman said, "The Prime Minister actually set the tone for the next-generation reforms on the 15th of August when he spoke from the Red Fort, and he desired that we give the benefit to the people at the earliest."
After the tax cuts were approved on Wednesday, Prime Minister Narendra Modi said that the "wide-ranging reforms will improve the lives of our citizens and ensure ease of doing business for all, especially small traders and businesses."