The proposal to remove 12% and 28% tax slab has been approved in the 56th meeting of the GST Council. This information was given by Finance Minister Nirmala Sitharaman at the press conference.
He said that to simplify the existing structure, two slabs will be implemented from 5% and 18% on the first day of Navratri i.e. 22 September. This will make around 175 items cheap. GST has also been abolished on health and life insurance.
Nirmala Sitharaman said that many food items including milk, roti, pizza bread, chena will be GST free. Apart from this, the tax on cement has been reduced from 28% to 18%.
Apart from this, 40% GST will be applied on luxury items and tobacco products. This meeting was to be held for two days (3-4 September), which has been finished in a day.
These changes will improve the lives of citizens: PM
PM Modi wrote on X, ‘In his speech on Independence Day, I said that we intend to improve the next generation in GST. The Central Government had prepared a detailed proposal to change the GST rates and to make the processes easier. Its purpose is to make the lives of common people easier and strengthen the country’s economy.
I am happy that the GST Council (which includes the Center and all states) has approved this proposal of the central government. This includes deduction in GST rates and several improvements. Which will benefit the general public, farmers, MSMEs, middle classes, women and youth. These major changes will improve the lives of our citizens and make it easy to do business. Especially small traders and businesses will help. ‘
Highlights of GST Council meeting
- Clothes and shoes will be cheap: According to sources, GST rates on shoes and clothes up to Rs 2,500 can be reduced to 5%, which will make these things cheaper to customers.
- Registration for MSME and Startups: According to NDTV reports, now the time taken in GST registration for micro, small and medium enterprises (MSMEs) and startups has been reduced from 30 days to 3 days.
- Automatic refund for exporters: Exporters will now get GST refund automatic. This proposal has also been approved, which will make their work easier.
- Health insurance and life -saving medicines will be affordable: According to money control report, the GST Council has agreed to cut the insurance premium rates, which will make it cheaper to take health insurance. In addition, GST rates on life saving drugs are also expected to decrease.
- Proposal for automatic returns filing: According to CNBC, the GST Council has also proposed to bring automatic return filing system, which will make it even easier to follow the rules related to GST.
- Tax will increase on luxury electric vehicles: According to Moneycontrol report, GST rate on luxury electric vehicles worth more than Rs 20 lakh can increase from 5% to 18%. If this proposal is approved, it can become a challenge for companies such as Tata Motors, Mahindra, Tesla and Mercedes-Benz.
GST rates possible on 175 items
GST rates may be cut on about 175 items. These include food ingredients, almonds, snacks, ready-to-Eat items, jam, ghee, butter, pickle, marmalade, chutney, automobile, tractor, electronics, AC and refrigerator etc. The average GST rate on all items will be reduced to below 10%, which is about 11.5%.
GST deduction benefits to the public, not companies
According to sources, in the GST Council meeting, the opposition states have demanded the security of revenue from the Center and protecting the interests of consumers. Opposition states say that companies should not allow profiteering by taking advantage of low tax. The full advantage of tax cuts should directly reach the customers’ pockets.
Also, they want a clean compensation plan to compensate the damage to the states from the new tax slab. Some BJP ruled states have also expressed concern about the revenue deficit with this change.
What do opposition states want?
When the GST was implemented in 2017, the Center promised the states to compensate the revenue loss for five years. For this, cess was imposed on luxury and sin goods (harmful goods), but this arrangement ended in June 2022. Now the opposition states want 40% of the money from luxury tax to go to the chest of the states, so that their financial condition does not deteriorate.
The aim of the central government is to demand demand and sales in many sectors in Navratri and Festive season. This is the reason why the new rates have been implemented from 22 September. In fact, the government is worried about the possibility of slowing the pace of sales in many major sectors. For this, she is working on removing concerns related to the Revenue Los of the states.
Approval received from a group of ministers of GST Council
Last week, the Group of Ministers (GOM) accepted the central government’s two -slab proposal. Bihar Deputy Chief Minister Emperor Chaudhary had said on August 21 that the group had approved the proposal of 5% and 18% structure by removing the current 12% and 28% rates.
New rates likely to reduce consumer goods prices
The new GST rates are expected to reduce the prices of consumer goods. Which can promote shopping in the festive season. However, states are concerned about revenue reduction, which the central government is trying to solve with several measures.
This proposal is expected to be finalized in the GST Council meeting. After which a simple and consumer friendly tax system may be implemented in the country.
The final decision in cases related to GST takes the GST Council. The council consists of finance ministers of all states and union territories as members.
PM announced GST reforms on Independence Day
Prime Minister Narendra Modi had told the Red Fort on Independence Day that this year Diwali is going to get a big gift. We are bringing Next Generation GST Reforms. Will reduce tax for ordinary people, everyday things will become cheaper, people will benefit greatly.
These goods will be cheap: Tax on these will be 12% to 5%
According to the expert, dried fruits, branded salty, tooth powder, toothpaste, soap, hair oil, normal antibiotics, painkillers, processed foods, snacks, frozen vegetables, condensed milk, some mobiles, some computers, sewing machines, pressure cookers, gases will be cheaper.
Apart from these, no electricity water filters, electric iron, vacuum cleaner, readymade clothes of more than 1000 rupees, shoes with a range of 500-1000 rupees, most vaccines, HIV/TB diagnostic kits, bicycles, utensils will also be taxed.
Products such as geometry boxes, maps, globes, glazed tiles, pre-fabricated building, vending machines, public transport vehicles, agricultural machinery, solar water heater also come in 12% tax slab. After approval of two slabs, they will be charged 5% tax.
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These goods will also be cheap: Tax on these will be 28% to 18%
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