GST Council Approves Landmark Tax Overhaul, Major Relief for Consumers

New Delhi, September 4: The GST Council, in a landmark decision, announced sweeping new GST reforms yesterday. As an outcome of the council meeting, the previous four-slab GST system has been removed, with the introduction of only two GST slabs. The new rates will be applicable from September 22 and are aimed at boosting household consumption in India and provide support to the key Indian sectors.

5% and 18% GST Slabs Introduced

In its meeting, the council removed the previous four GST slabs of 5%, 12%, 18% and 28% limiting the GST structure to only two GST slabs of 5% and 18%. However, the council also approved a special 40% GST slab to sin and luxury goods such as high-end cars, yachts, aircraft for personal use, racing cars, tobacco and aerated drinks with added sugar.

Revenue Secretary Arvind Shrivastava said that the new GST reforms will cost ₹48,000 crore but the system will still remain fiscally sustainable. He added that even though ₹48,000 is a high number, he believes that improved compliance and higher consumption will balance revenue.

Major Relief on Household Goods and Services

Indian consumers are likely to benefit from the lower GST burden. Here are daily-used goods and their new GST slab:

• NIL GST: Parathas (down from 18%), roti/chapati, ultra-high temperature milk, paneer, pizza bread, khakra, erasers, maps, sharpeners, and exercise books.
• 5% GST: Butter, ghee, dry fruits, cheese, condensed milk, ice cream, jam, fruit juices, namkeen, biscuits, corn flakes, shampoo, toothpaste, soap, hair oil, toothbrushes, talcum powder, kitchenware, feeding bottles, bicycles, combs, and bamboo furniture.
• 18% GST (Previously 28%): Cement, air conditioners, washing machines, dishwashers, refrigerators, TVs, motorcycles up to 350 cc, and small cars (petrol vehicles up to 1,200 cc and diesel vehicles up to 1,500 cc).

Electric Vehicles (EVs) will continue to attract 5% GST, while the GST burden has been removed on premiums paid for individual life insurance and health insurance policies, including family floaters. The GST burden was 18% for these premiums previously.

Unanimous Support From States

Union Finance Minister Nirmala Sitharaman said all decisions were unanimous, with no state opposing the move. She added that the reforms are designed to benefit the common man, strengthen labour-intensive industries, and support agriculture and healthcare.

“These rate cuts will have a very positive impact on GDP growth,” Sitharaman said, noting that the changes reflect the Centre’s focus on easing the cost burden for households while encouraging economic activity.”

Positive Sentiment For The Stock Market

The Indian stock market, along with major indices such as Sensex and Nifty opened on a significant positive note. As of 9:45 AM, Sensex is up by 0.77%, or 618.34 points and is trading at 81,186.05. On the other hand, Nifty is up by 0.71`%, or 174.25 points and is trading at 24,889.30.

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