Srinagar: The Goods and Services Tax (GST) Council on Wednesday approved a complete overhaul of India’s tax consumption tax since its launch in 2017, slashing duties on household essentials, medicines, small cars and appliances and affecting everything from toothpaste and insurance to tractors and cement.
The council approved the rate overhaul by limiting slabs to 5 per cent and 18 per cent, as the Centre seeks to boost domestic spending and cushion the economic blow of the US tariffs imposed on Indian goods.
The council reduced the current four slabs – 5, 12, 18 and 28 per cent – to the two-rate structure of 5 per cent and 18 per cent. A special 40 per cent slab is, however, proposed for a select few items such as high-end cars, tobacco and cigarettes.
The new rates for all products, except pan masala, gutkha, cigarettes, chewing tobacco products like zarda, unmanufactured tobacco and bidi, will be effective September 22.
WHAT GETS CHEAPER
Daily essentials: Hair oil, toilet soaps, shampoos, toothbrushes, tableware and kitchenware will now attract just 5% GST, down from 18%.
Food products: UHT milk, paneer and all types of Indian breads, including parathas, are now exempt from GST, falling from 5% to zero. Packaged food items such as namkeen, bhujiya, sauces, pasta, cornflakes, butter and ghee will now attract only 5%.
Healthcare: Thirty-three life-saving drugs and medicines, earlier taxed at 12%, will now be exempt. Spectacles and goggles for vision correction have been slashed from 28% to just 5%.
Housing: Cement, a key construction input, has been brought down from 28% to 18%, significantly reducing building costs.
Automobiles & durables: Air conditioners, dishwashing machines and TVs above 32 inches drop from 28% to 18%. All TVs, regardless of size, now attract 18%. Small cars and motorcycles below 350cc, along with three-wheelers, move from 28% to 18%. Petrol cars under 1200cc and diesel cars under 1500cc are down to 18%. Larger passenger vehicles such as buses, trucks and ambulances also move to 18%. Auto parts have been unified at the 18% slab.
Labour-intensive sectors: Handicrafts, marble and granite blocks, as well as intermediate leather goods, will now attract 5% GST instead of 12%. Natural menthol cut to 5% from 12%; man-made fibre reduced from 18% to 5%, and man-made yarn from 12% to 5%.
WHAT GETS COSTLIER
Luxury and sin goods: A new 40% slab will apply to paan masala, cigarettes, gutkha, bidis, aerated drinks with added sugar, carbonated and caffeinated beverages, and fruit-based non-alcoholic drinks.
High-end vehicles and leisure products: Motorcycles above 350cc, mid-size and large cars, yachts, and personal aircraft will now face 40% GST.
Tobacco products: Importantly, GST will now be levied on the retail sale price (RSP) of paan masala and tobacco, instead of wholesale value-pushing up final prices.
