The Goods & Services Tax (GST) is an indirect tax imposed on the supply of goods and services, which serves as a multi-stage tax imposed on every value addition. GST has replaced multiple indirect taxes, including excise, VAT, service tax etc.
The 56th GST Council Meet Highlights:
On September 3, the GST Council Meet was held in New Delhi, chaired by the Finance Minister, Nirmla Sitharaman, and through the entire day, several key decisions were undertaken.
GST tax rates on common use items ranging from hair oil to corn flakes, TVs, and personal health and life insurance policies were slashed after the all-powerful GST Council approved a complete overhaul of the tangled goods and services tax regime. Almost all personal-use items will see rate cuts as the government looks to boost domestic spending and cushion the economic blow of the US tariffs.
‘Tax Rationalization’ or ‘Rate Rationalization’, as the term has been coined by the Finance Ministry and the all-inclusive GST Council,
Key Takeaways:
- The Union Finance Minister Nirmala Sitharaman said all decisions were taken unanimously, with no disagreement with any state.
- The panel approved simplifying the goods and services tax (GST) from the current four slabs — 5, 12, 18 and 28% — to a two-rate structure — 5 and 18%.
- A special 40% slab has been also proposed for a select few items such as high-end cars, tobacco and cigarettes – termed as a the ‘Sin & Luxury Good’ slab.
- The new rates for all products, except gutkha, tobacco and tobacco products and cigarettes, will be effective from September 22 — the first day of Navratri.
- For health and life insurance – the GST would be slashed from 18% to Nil, thereby directly reducing the cost of premiums and promote wider adoption to strengthen financial security for households. The aim is ‘to boost affordable coverage for common man’.
- In the automobile sector, hybrid vehicles with an engine capacity exceeding 1200 cc will fall under the 40% slab bracket (still lesser than 50%, which was the case until now, with 28% GST and the cess charges added separately).
- Caffeinated drinks and carbonated beverages will also be covered in the 40% bracket itself.
- Revolvers, pistols, yachts and other vessels for pleasure or sports will now attract a 40% tax rate.
- The items for daily household use – soaps, paneer, any Indian bread varieties, school-use maps, stationery items, pencil & crayons -will have no GST charges henceforth.
- In a major relief for the Indian farmers, the GST Council cuts the rate to 5% on farm goods from the existing rate of 12%, on tractors, agricultural and forestry machinery, lawn or sports ground rollers, drip irrigation equipment or nozzles.
- Salted or spiced popcorn will attract a 5% GST, whether sold loose or packaged.
- Caramel popcorn will be taxed at 18%, as it contains sugar and falls under confectionery.
Check out the complete list of existing and revised GST charges, as the BJP-led government plans to counter the impact caused by US Tariffs and focus on the ‘Make in India’ approach.
