India's GST Council on Wednesday approved a simplified two-tier tax structure with rates of 5% and 18%, set to take effect from September 22. The decision was reached during the 56th meeting of the Council, addressing the issues of retail consumption, compensation cess and also the weakening exports due to global trade volatilities.
Here is a detailed look at the key changes in tax rates on essential, non-essential and luxury goods and services.
WHAT IS CHEAPER NOW
Dairy, staples and packaged foods
UHT milk, roti, paratha, sweets, chocolates, coffee, sauces and biscuits will be tax free, a big revamp from earlier structure.
Healthcare items
Thirty-three life-saving drugs, diagnostic kits, medical oxygen, thermometers, glucometers, and health and life insurance policies are also fully exempted from GST. Some essential medicines that earlier attracted 5–12% tax have also been moved to the nil category.
Insurance
GST on individual life and health insurance premiums has been reduced to zero.
Education and stationery
Maps, charts, globes, pencils, notebooks, erasers, and other stationery items will also be completely exempt from GST now.
Daily essentials and personal care
Products like hair oil, shampoo, toothpaste, soap, toothbrushes, shaving cream, butter, ghee, paneer, and packaged snacks such as namkeen and mixtures will now be taxed at 5%, down from 12–18%.
Farming and agriculture equipment
Tractors, tractor parts, tyres, bio-pesticides, drip irrigation systems, sprinklers, and other farm machinery will be taxed at 5%, instead of 12–18%.
Everyday vehicles
Small passenger cars (petrol/LPG/CNG up to 1,200 cc; diesel up to 1,500 cc; length up to 4 metres), two-wheelers up to 350 cc, three-wheelers, goods carriers, buses, and ambulances will now be taxed at 18%, down from 28% plus cess.
Home appliances and electronics
Air conditioners, TVs larger than 32 inches, monitors, projectors, and dishwashers will now attract 18% GST, instead of 28%.
Building materials and textiles
Cement is down to 18% from 28%. Footwear, textiles, handicrafts, man-made fibres, and yarn will now be taxed at just 5%.
Renewable energy and others
Renewable energy components, some chemicals like sulphuric acid, and certain construction materials have been moved to the 5% slab. A few items have even become completely tax-free.
WHAT IS COSTLIER NOW
Luxury and “sin” goods
Premium motorcycles above 350 cc, yachts, private aircraft, and luxury vehicles will now be taxed at a steep 40%, compared to the earlier 28% plus cess.
Tobacco, gutkha and pan masala
These items will continue to attract GST plus compensation cess until all dues are cleared. After that, they will move to a flat 40% GST based on retail price.
Sugary and fizzy drinks
Aerated and carbonated beverages will now attract 40% GST, up from 28%.
Coal
Coal will be taxed at 18%, higher than before, making it costlier.