Big GST Cut Likely: Common Items To Get Cheaper
Items widely used by middle-class and economically weaker sections will become more affordable. The government is looking at a simplified and easy-to-comply GST.
The central government is seriously considering a restructuring of the Goods and Services Tax (GST) slabs. A key proposal under discussion is to either reduce the GST on certain essential items from 12% to 5% or to eliminate the 12% slab altogether.
According to sources, this restructuring would target items widely used by middle-class and economically weaker sections such as toothpaste and tooth powder, umbrellas, sewing machines, pressure cookers and kitchen utensils, electric irons, geysers, small-capacity washing machines, bicycles, readymade garments priced over Rs 1,000, footwear priced between Rs 500 and Rs 1,000, Stationery items, Vaccines, ceramic tiles and agricultural tools, among other things.
If the proposed changes are implemented, many of these items will become more affordable. The government is also looking at a simplified and easy-to-comply GST.
Finance Minister Nirmala Sitharaman, in a recent interview, hinted at potential changes in GST rates, stating that the government was actively working towards a more rational structure and considering relief for the middle class on essential items.
A final decision is likely to be taken at the upcoming 56th meeting of the GST Council. As per protocol, a 15-day notice is required before convening a Council meeting, but sources indicate that the session could take place later this month. If the proposal goes through, it would mark one of the most significant overhauls of GST rates since the indirect tax system was rolled out in 2017.
Tobacco, Automobiles Will Cost More
Cigarettes, carbonated drinks, and high-end cars are among items that may become more expensive if a proposal to replace the expiring compensation cess - in the Goods and Services Tax system - with cesses on health and clean energy, targeting tobacco products and automobiles, is passed. The Health Cess will apply to 'sin goods' - referring to products usually taxed at higher rates due to their perceived negative impact on society - and others in the higher 28 per cent GST bracket. Sources said a panel - the Group of Ministers, or GoM, on Compensation Cess - chaired by junior Union Finance Minister Pankaj Chaudhary is expected to discuss the matter later this month.
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