GST Council clears 2-slab structure: What gets cheaper, what gets expensive

Finance Minister Nirmala Sitharaman announces GST overhaul with zero tax on breads and life-saving drugs, lower duty on cement, soaps and tractors, and higher rates on TVs and cars

The Goods and Services Tax (GST) Council on Wednesday approved a two-slab structure, removing the 12 per cent and 28 per cent slabs and slashing rates on a wide range of essential items while bringing higher levies on select products. Union Finance Minister Nirmala Sitharaman described the move as not just rate rationalisation but a “structural reform” that will ease compliance for businesses and consumers.

 

“All decisions were taken unanimously, with no disagreement from any state,” Sitharaman said during a press conference after the meeting.  The finance minister said the new GST rates will take effect from September 22, the first day of Navratri. 

What gets cheaper

 

Daily-use goods such as hair oil, shampoo, soaps, toothpaste, and shaving cream will now attract a 5 per cent tax instead of 18 per cent. Items like butter, ghee, cheese, dairy spreads, namkeens, bhujia, and mixtures will also be taxed at 5 per cent instead of 12.

 

Basic foods including UHT milk, paneer, roti, chapati and paratha have been moved to the nil rate category. Life-saving drugs too remain exempt.

 

Key reductions on essentials:

 

• Hair oil, shampoo, toothpaste, soap, shaving cream: 18% - 5%
• Butter, ghee, cheese & dairy spreads: 12% - 5%
• Pre-packaged namkeens, bhujia & mixtures: 12% - 5%
• Utensils: 12% - 5%
• Feeding bottles, napkins for babies, clinical diapers: 12% - 5%

 

Relief for healthcare and education

 

Healthcare items such as thermometers, medical-grade oxygen, diagnostic kits, glucometers, and corrective spectacles will all move down to 5 per cent. Individual health and life insurance policies are now exempt from GST.

 

Education supplies including maps, globes, pencils, crayons, exercise books and erasers will now attract nil tax.

 

Key changes in healthcare and education:

 

• Health & life insurance: 18% - Nil
• Thermometer: 18% - 5%
• Medical-grade oxygen: 12% - 5%
• Exercise books, notebooks, pencils, crayons: 12% - Nil

 

Support for farmers and agriculture

 

The GST Council cut rates on tractors and farm machinery. Tractor tyres and parts will fall from 18 per cent to 5 per cent, while agricultural, horticultural and forestry machines for soil preparation, cultivation and threshing drop from 12 to 5 per cent.

 

Key changes for agriculture:

 

• Tractor tyres & parts: 18% - 5%
• Tractors: 12% - 5%
• Drip irrigation systems & sprinklers: 12% - 5%

  Cement, vehicles and auto parts

 

The much-anticipated cut on cement has been approved, with rates falling from 28 per cent to 18 per cent. Three-wheelers, buses, trucks and ambulances also move from 28 to 18 per cent.

 

Uniform tax has been set at 18 per cent on all auto parts, regardless of classification. Small cars and motorcycles up to 350 cc will now attract 18 per cent, down from 28 per cent.

 

Key changes for automobiles and construction:

 

• Cement: 28% - 18%
• Three-wheelers: 28% - 18%
• Motorcycles up to 350 cc: 28% - 18%
• Buses, trucks, ambulances: 28% - 18%
• All auto parts: Uniform 18%

 

Electronics and appliances

 

GST on televisions above 32 inches, dishwashing machines, air conditioners, monitors and projectors has been reduced from 28 per cent to 18 per cent.

 

Key changes in appliances:

 

• Air conditioners: 28% - 18%
• TVs above 32 inches: 28% - 18%
• Monitors & projectors: 28% - 18%
• Dishwashing machines: 28% - 18%

What gets expensive

 

• Pan masala: 28% - 40%
• Sugary/flavoured goods including aerated waters: 28% - 40%
• Other non-alcoholic beverages: 18% - 40%
• Fruit-based carbonated drinks and drinks with fruit juice: 28% - 40%
• Caffeinated beverages: 28% - 40%
• Unmanufactured tobacco (except raw leaves): 28% - 40%
• Cigars, cheroots, cigarillos, cigarettes: 28% - 40%
• Other manufactured tobacco products (including homogenised/reconstituted, extracts, essences): 28% - 40%
• Tobacco/nicotine products for inhalation without combustion: 28% - 40%
• Passenger cars (including station wagons and racing cars): 28% - 40%
• Hybrid petrol cars (engine >1200cc or length >4000 mm): 28% - 40%
• Hybrid diesel cars (engine >1500cc or length >4000 mm): 28% - 40%
• Motorcycles above 350cc: 28% - 40%