&imwidth=800&imheight=600&format=webp&quality=medium "GST reforms proposed: What will become cheaper after tax reduction?")
India's central government has proposed to bring down GST rates for the majority of goods and services in a bid to boost internal consumption to spur the world's fastest-growing economy. Many goods and services, including cars, are likely to get cheaper from October if the proposal is implemented.
What's GST?
The GST regime was implemented in 2017. It subsumed over a dozen domestic state taxes under the principle "one nation, one tax and one market".
The system categorizes goods and services into four slabs: 5 per cent, 12 per cent, 18 per cent, and 28 per cent. The government also imposes additional levies in the form of cess on several luxury goods. It was, however, being criticized for being too complex.
Last year, a controversy erupted over how popcorn was being taxed. Pre-packaged salted popcorn is taxed at 12%, but caramel one at 18%. Similarly, plain Indian flatbreads attract a 5% tax, but the flaky, multi-layered variety faces a levy of 18%, pointed out Reuters, in its report on GST.
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All you need to know about the proposed reforms
The government is reportedly mulling abolishing the 28 per cent tax slab. Articles like cars, air conditioners, and refrigerators fall into this category. Such products will likely be moved into a new category -- 18 per cent. So these goods will become cheaper.
99 per cent of products that are taxed at 12 per cent will move into the 5 per cent bracket. These items will include butter, fruit juices, and dry fruits. Small cars will also become cheaper as they will be moved into the 18 per cent GST slab.
What will become cheaper?
Personal care items like hair oil and toothpaste, and construction goods like cement, will likely become cheaper. Televisions may also become cheaper.
Sewing machines, pressure cookers, and small washing machines might also become cheaper, reported NDTV.
Bicycles, budget garments, budget footwear, vaccines, tiles, agricultural tools, mobile phones, and computers can also attract lesser taxes.