The 56th GST Council meeting, led by Finance Minister Nirmala Sitharaman, kicked off in New Delhi on September 3 and will conclude on September 4. A key focus is the overhaul of the GST slab structure, potentially streamlining the current four-tier system into two main slabs, alongside a special tax rate for certain goods.
The proposed changes could see the 12% and 28% slabs eliminated, leaving only 5% and 18% rates, with a new 40% slab for so-called “sin goods,” according to ANI. This restructuring aims to simplify taxation and boost consumer spending.
Key Expectations from the GST Council Meeting
- Simplified Slab Structure: The council is considering a two-tier GST system 5% for essentials and 18% for non-essentials replacing the existing 5%, 12%, 18%, and 28% slabs, as reported by ANI.
- Special Tax for Sin Goods: A 40% slab may be introduced for items like tobacco and luxury cars priced above ₹50 lakh.
- Widespread Rate Cuts: Around 175 items could see reduced GST rates, per Reuters, impacting sectors like automobiles, FMCG, and insurance, which are expected to draw significant market attention.
What’s Likely to Get Cheaper?
As a consumption-driven tax, GST reforms are poised to benefit consumers by lowering costs on a range of goods and services. Sources cited by PTI indicate these changes will make daily essentials more affordable. Items expected to see price drops include:
- Groceries: Food, fruits, vegetables, and medicines.
- Electronics: Air conditioners, televisions, refrigerators, and washing machines.
- Agricultural Equipment and Bicycles.
- Insurance and Education Services.
- Items Moving from 12% to 5%: Condensed milk, dried fruits, frozen vegetables, sausages, pasta, jams, namkeens (including bhujiya), tooth powder, feeding bottles, carpets, umbrellas, bicycles, utensils, furniture, pencils, jute or cotton handbags, and footwear under ₹1,000.
What Could Get More Expensive?
Some items are expected to face higher taxes under the proposed reforms:
- Sin Goods in the 40% Slab: Luxury goods, high-end cars, alcohol, gambling, soft drinks, drugs, fast food, coffee, sugar, and tobacco products.
- Fuel-Derived Products: Briquettes, coal, and items derived from coal, lignite, or peat.
- High-End Clothing: Ready-made garments priced above ₹2,500 may shift from the 12% slab to 18%.
With inputs from ANI, Reuters, and PTI.