The Goods and Services Tax (GST) Council has approved a major overhaul of India’s indirect tax regime, simplifying the existing four-tier structure of 5%, 12%, 18%, and 28% to just two major slabs: 5% and 18%. A special higher slab of 40% has been introduced for luxury and sin goods. Here are the key changes:
What’s Getting Cheaper?
- Food and Beverages:
- Chapatis and paranthas are now tax-free.
- Milk, paneer, pizza bread, and khakra attract zero tax.
- Products like butter, ghee, dry nuts, sausages, jam, ice cream, biscuits, and cereals now fall under the 5% slab.
- Household Essentials:
- Toothpaste, shampoos, soaps, hair oils, and face powders are now taxed at 5% instead of 18%.
- Feeding bottles, combs, bicycles, and bamboo furniture drop from 12% to 5%.
- Appliances and Consumer Electronics:
- Air conditioners, dishwashers, and televisions move to the 18% bracket from 28%.
- Stationery and Educational Supplies:
- Items like pencils, sharpeners, crayons, notebooks, and globes are now tax-free.
- Clothing and Footwear:
- Textiles and footwear are now taxed at 5%, down from 12%.
- Healthcare Products:
- Critical medical supplies like thermometers, diagnostic kits, glucometers, corrective spectacles, and medical-grade oxygen are taxed at 5% or nil.
What’s Getting Costlier?
- Aerated and Caffeinated Drinks:
- Beverages like Coca-Cola, Pepsi, and other sugary soft drinks are now taxed at 40%, up from 28%.
- Luxury and High-End Vehicles:
- Automobiles over 1,200cc, motorcycles above 350cc, yachts, and racing cars will now carry the 40% GST tag.
- Gambling and Leisure Services:
- Activities like horse racing, lotteries, casinos, online gaming, and rental services for yachts or race clubs will be taxed at 40% ¹ ².
These changes aim to stimulate domestic consumption, shield the economy from global shocks, and promote affordability. The new rates will come into effect from September 22, excluding tobacco and related products
