GST overhaul by Diwali: What taxes will come down, what remains unchanged — Details inside
&imwidth=600&imheight=450&format=webp&quality=medium "GST overhaul by Diwali: What taxes will come down, what remains unchanged — Details inside")
Representational Image. Photograph: (Wikimedia Commons)
The upcoming GST reform is likely to revamp the four-tier GST structure (5%, 12%, 18%, and 28%), streamlining it into two main slabs. Taxes paid by citizens will be drastically reduced, and it will benefit small industries as well as MSMEs, along with daily-use products.
India is set to witness its biggest GST reform since 2007 after Prime Minister Narendra Modi announced a significant decision while addressing the nation on Independence Day to simplify the GST framework by Diwali. The decision was announced to reduce taxes primarily on everyday items to boost consumer spending and cushion the economy amid trade pressures, with the aim of boosting disposable incomes for the middle class.
PM Modi has also said that taxes paid by citizens will be drastically reduced, and it will benefit small industries as well as MSMEs, along with daily-use products that will become cheaper.
What taxes will come down, and what will get cheaper?
The four-tier GST structure (5%, 12%, 18%, and 28%) will be streamlined into two main slabs: 5 per cent and 18 per cent. Additionally, a special 40 per cent rate for luxury goods and sin goods like tobacco, according to a report by TOI.
Notably, 99 per cent of items currently taxed at 12 per cent may shift to the 5 per cent slab, dramatically reducing prices on numerous essentials. Similarly, up to 90 per cent of goods in the 28 per cent category, including consumer durables and automobiles, could be moved to the 18 per cent slab, as per the PTI report.
Trending Stories
)
)
)
)
)
)
)
)
&im=FitAndFill=(700,400))
)
&im=FitAndFill=(700,400))
)
)
)
&im=FitAndFill=(700,400))
)
&im=FitAndFill=(700,400))
)
&im=FitAndFill=(700,400))
&im=FitAndFill=(700,400))
)
)
)
)
As per the Mint report, everyday essential items that will get cheaper will include groceries, medicines, and frozen veggies. Food items include dried fruits, jams, pasta, namkeens, and sausages. Household goods include utensils, carpets, furniture, and umbrellas. Lifestyle products include footwear (below ₹1,000), handbags (jute/cotton), and appliances (televisions and washing machines); Education & insurance services; and the Farm sector includes agricultural equipment and bicycles.
Additionally, small cars, which currently attract 28 per cent GST plus small cess rates of 1-3 per cent, might get moved into the 18 per cent tax slab in the new dispensation, government sources told The Indian Express. On the other end, the bigger luxury cars and SUVs are likely to be moved into the special rate category of 40 per cent following the removal of the 28 per cent slab, sources added.
What will remain unchanged?
According to the Economic Times, the GST structure will continue to feature the 5%, 18%, and 40% slabs, with no mention of further lowering of luxury items beyond the sin goods bracket. Moreover, products like petroleum and alcohol, which are outside the GST regime, are taxed as before.
While this revamp in the tax is expected to cost the exchequer significantly, officials affirmed that the revenue loss can be managed through efficient fiscal planning. In addition, economists estimate that the cuts could give a 0.6–0.7% GDP boost, as per the news agency Reuters.
