With the rollout of the Goods and Services tax reforms (GST reforms) on Monday, the first day of Navratri, reduced GST rates will be applicable on 375 items, covering a wide range of services – from automobiles to daily consumer items. The GST council, headed by finance minister Nirmala Sitharaman, had announced the reform of the Goods and Services Tax (GST) on September 4.
GST rate cut | Key points
– Two-tier structure
Under the GST reforms, the new system introduces a two-tier structure. Until now, GST had been levied across four tax slabs – 5%, 12%, 18%, and 28% – and included a compensation cess on luxury and “sin” goods.
Starting September 22, most goods and services will be taxed at 5% or 18%, while ultra-luxury items or “sin” goods will face a 40% tax. Tobacco and related products will remain in the 28% bracket, along with an additional cess.
– What gets cheaper?
GST rates will be reduced for daily-use items like snacks, coffee, ghee, paneer, butter, ketchup, jam, dry fruits, and ice cream. The GST on aspirational goods like TVs, air conditioners, and washing machines has also been reduced.
The taxes on medicines has also been brought down from 12% to 5%, with critical life-saving drugs for cancer, genetic and rare disease being exempted from the tax altogether. Almost 99% of the goods which earlier attracted 12% GST will now come under 5% tax slab.
– PM Modi’s ‘Bachat Utsav’
In his address to the nation on Sunday, Prime Minister Narendra Modi said that Indians will save ₹2.5 lakh crore with the GST rate revisions, which come into effect today, in addition to the income tax reforms.
While describing it as “Bachat Utsav,” PM Modi said that reduced GST rates would provide relief to the poor and the neo-middle class.
“With these reforms the youth, farmers, women, shopkeepers, traders, entrepreneurs will all be able to benefit from this Bachat Utsav (savings festival),” PM Modi said, adding that people would be able to save more during the festive season.
The Prime Minister further highlighted the positive effect that the new GST regime would have on medium and small enterprises. Modi said that it would enhance competitiveness and boost the economy.
Read more at : Hindustan Times
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