Finance Minister Nirmala Sitharaman on Wednesday announced major Goods and Services Tax (GST) rate cuts, saying that with the two-tier tax rate system approved, the common man will benefit greatly. The GST Council approved the two-tier rate structure of 5% and 18%. The GST rate rationalisation will be implemented from September 22, according to a PTI report.“For common man and middle class items, there is a complete reduction from 18% and 12 to 5%. Items such as hair oil, toilet, soap bars, soap bars, shampoos, toothbrushes, toothpaste, bicycles, tableware, kitchenware and other household articles are now at 5%,” FM Sitharaman said.The 56th Goods and Services Tax (GST) Council meeting commenced on Wednesday to review potential rate reductions and category adjustments for numerous items under the indirect taxation system. PM Narendra Modi in his Independence Day address had announced the upcoming GST reforms and rate cuts, Finance Minister Nirmala Sitharaman led these deliberations.After the GST Council meeting, Bihar’s Deputy Chief Minister Samrat Choudhary confirmed unanimous support from all states regarding rate rationalisation, emphasising the collective nature of the decision. According to West Bengal Finance Minister Chandrima Bhattacharya, the GST rate rationalisation would result in a substantial revenue deficit of Rs 47,700 crore.Suresh Khanna, Finance Minister of Uttar Pradesh, stated that discussions regarding tax rates on demerit goods remained inconclusive, with decisions about additional levies beyond 40 per cent postponed for future consideration.The extensive 56th GST Council meeting, spanning 10.5 hours, provided a platform for the Centre and states to deliberate and discuss crucial tax proposals.The modifications to the GST structure are crucial for boosting domestic consumption and helping businesses counter the impact of the United States’ 50% import duty on Indian products.
GST rate cuts: Key Highlights
– The government’s new GST framework consolidates rates into three primary tax slabs – 5%, 18% and 40% – by reallocating items from existing 12% and 28% categories.– The revised structure implements a standardised 5% tax rate for most food and textile items, which are currently taxed at varying rates.– Common household appliances like refrigerators, large television sets and air-conditioners would attract 18% GST, offering reduced taxation under the proposed system.– The highest slab of 40% would be applicable to sin goods and premium items, including large vehicles, potentially replacing the present cess arrangement. – The reorganisation is expected to shift approximately 99 per cent of items from the current 12 per cent category to 5 per cent, whilst about 90 per cent of products presently under 28 per cent taxation would move to the 18 per cent bracket.This story is being updated
