In a major move that promises to put more money back in the pockets of everyday Indians, the GST Council, led by Finance Minister Nirmala Sitharaman, has announced a sweeping rationalisation of the tax structure. The big change? Simplifying the current four main tax slabs down to just two.
Starting September 22, the 12% and 28% GST rates will be scrapped. The new system will retain only the 5% and 18% slabs, a decision that top industry bodies are calling a “phenomenal milestone” for the Indian economy.
Leading industry chambers like CII and PHDCCI have warmly welcomed the GST reforms and have pledged to work with the government to ensure a smooth rollout. They also promised that businesses will swiftly pass on the benefits of these tax cuts to consumers.
So, what does this mean for you?
Get ready for lower prices on a host of everyday items. Commonly used products like toiletries, packaged foods, and utensils, which were earlier taxed between 12% and 18%, will now see their GST rate slashed to just 5%. This move is expected to provide immediate relief to household budgets and stimulate consumer demand.
The reforms also bring excellent news for farmers. Key agricultural inputs, including tractors, tyres, and irrigation systems, will see their GST rates reduced to 5%, effectively lowering farming costs and boosting the rural economy.
In a socially progressive step, the Council has exempted individual life and health insurance policies from GST. Essential medical supplies like medical oxygen and diagnostic kits will also attract nil GST, making healthcare more affordable for millions.
The reduction in GST rates is also set to boost manufacturing and create jobs. Lower taxes on automobiles, appliances, and electronics are expected to increase industry volumes, creating a positive multiplier effect across the economy.
Industry leaders believe these landmark GST reforms will ease compliance for businesses, reduce litigation, and provide much-needed predictability. By simplifying the tax structure and putting more money in the hands of consumers and businesses, India is firmly set on a path of stronger growth and inclusivity.
