New Delhi: The government on Wednesday announced the next generation GST reforms as promised by Prime Minister Narendra Modi in his Independence Day speech.
Making the announcement, Union Minister Nirmala Sitharaman said that the new GST structure will have just two slabs of 5 per cent and 18 per cent, scrapping the existing slabs of 12 per cent and 28 per cent. Besides this, a new slab of 40 per cent will be for the sin goods like tobacco products and alcohol. The new tax rates will be effective from September 22, 2025. Let's take a look at what will get cheap and what's going to be costly:
List of daily use items going from 18% to 5%
- Hair Oil, Shampoo, Toothpaste, Toilet Soap Bar, Tooth Brushes, Shaving Cream
List of daily items going from 12% to 5%
- Butter, Ghee, Cheese & Dairy Spreads
- Pre-packaged Namkeens, Bhujia & Mixtures
- Utensils
- Feeding Bottles, Napkins for Babies & Clinical Diapers
- Sewing machines and parts
List of items going from 18% to NIL in health sector
- Individual Health & Life Insurance
List of items going from 12% to 5% in health sector
- Thermometer
- Medical Grade Oxygen
- All Diagnostic Kits & Reagents
- Glucometer & Test Strips
- Corrective Spectacles
List of items going from 12% to NIL in education sector
- Maps, Charts & Globes
- Pencils, Sharpeners, Crayons
- & Pastels
- Exercise Books & Notebooks
- Eraser
List of items in farming and agriculture going from 18% to 5%
- Tractor Tyres & Parts
List of items in farming and agriculture going from 18% to 5%
- Tractors
- Specified Bio-Pesticides licro-Nutrients
- Drip Irrigation System &
- Sprinklers
- Agricultural, Horticultural or Forestry Machines for Soil Preparation, Cultivation, Harvesting & Threshing
https://www.youtube.com/watch?v=gBsVCe9U0E8
Items going from 28% to 18% in automobiles sector
Petrol & Petrol Hybrid, LPG, CNG Cars (not exceeding - 1200 cc & 4000mm) Diesel & Diesel Hybrid Cars (not exceeding - 1500 cc & 4000mm) Motor Cycles (350 cc & below) 3 Wheeled Vehicles Motor Vehicles for transport of goodsList of electronic devices going from 28% to 18% slab
- Air Conditioners
- Television (above 32")
- (including LED & LCD TVs
- Monitors & Projectors
- Dish washing machines
Biggest GST Reforms | Key Takeaways
- The GST Council approved limiting slabs to 5 per cent and 18 per cent effective from September 22, the first day of Navaratri.
- Items of common use from roti/paratha to hair oil, ice creams and TVs will cost less, while tax incidence on personal health and life insurance will be brought down to nil.
- Almost all personal-use items will see rate cuts as the government looks to boost domestic spending and cushion the economic blow of the US tariffs.
- The panel approved simplifying the GST from the current four slabs - 5, 12, 18 and 28 per cent, to a two-rate structure - 5 and 18 per cent.
- A special 40 per cent slab is also 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, she said.
- While daily use food items will continue to attract nil tax rate, tax rate has been slashed to nil from 5 per cent on ultra-high temperature milk, chena or paneer, pizza bread, khakra, plain chapati or roti.
- Nil will also be the tax on paratha (currently charged at 18 per cent).
- Common use food and beverages ranging from butter and ghee to dry nuts, condensed milk, cheese, figs, dates, avocados, citrus fruits, sausages and meat, sugar boiled confectionery, jam and fruit jellies, tender coconut water, namkeen, drinking water packed in 20-litre bottles, fruit pulp or fruit juice, beverages containing milk, ice cream, pastry and biscuits, corn flakes and cereals, and sugar confectionery are likely to see a cut in tax rate to 5 per cent from current 12 per cent or 18 per cent.
https://www.youtube.com/watch?v=DJ8WfEkbKwE
- Erasers, maps, pencil sharpeners and exercise books will be charged at nil from 5 per cent.
- Consumer goods such as tooth powder, feeding bottles, tableware, kitchenware, umbrellas, utensils, bicycles, bamboo furniture and combs will see rate cut from 12 per cent to 5 per cent.
- The same on shampoo, talcum powder, toothpaste, toothbrushes, face powder, soap and hair oil has been cut down from 18 per cent to 5 per cent.
- All individual life and health insurance policies will now attract nil tax in a bid to boost coverage.
- Cement will cost less with the tax rate coming down from 28 per cent to 18 per cent.
- Petrol, LPG and CNG vehicles of less than 1,200 cc and not more than 4,000 mm length and diesel vehicles of up to 1,500 cc and 4,000 mm length would move to 18 per cent rate from the current 28 per cent.
- Motorcycles up to 350 cc, consumer electronics like ACs, dishwashers, and TVs too would be taxed at a lower GST of 18 per cent as against 28 per cent currently.
- All automobiles above 1,200 cc and longer than 4,000 mm as well as motorcycles above 350 cc, yachts and aircraft for personal use, and racing cars will be charged with a 40 per cent levy. Aerated drinks containing added sugar will be taxed at 40 per cent.
- EVs will continue to be charged at 5 per cent.
- The financial implication of the rate rationalisation would be Rs 48,000 crore and this would be fiscally sustainable, Revenue Secretary Arvind Shrivastava told reporters.
- The decision by the GST Council would bring down the overall premium as the tax component has significantly come down.
With inputs from PTI
