The GST Council Wednesday gave its nod to a two-tier rate structure of 5 and 18 per cent with the new structure set to be implemented from September 22. At a late-night presser, Finance Minister Nirmala Sitharaman said that the main drivers of the economy were the focus of the decision of the Council.
Sitharaman said the changes were aimed at “structural reform” and that “rates on most common-use items have come down.” She said that all decisions were taken unanimously, with no state opposing the revisions.
What gets cheaper?
Daily essentials: Hair oil, soaps, bicycles – GST reduced to 5 per cent from 12 to 18 per cent.
Food items: Roti and paratha to be taxed at nil rate.
Health: Life-saving cancer drugs exempted from GST.
Insurance: Individual life and health policies exempted.
Consumer goods: All television sets now uniformly taxed at 18 per cent, bringing down rates on smaller models.
Handicrafts and construction: Handicrafts, marbles, granite blocks to be taxed at 5 per cent.
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What gets costlier?
Vehicles: Small cars and motorcycles up to 350 cc to attract 18 per cent GST.
Auto sector: All automobile parts taxed at 18 per cent.
Luxury and sin goods: Motorcycles above 350 cc and aircraft for personal use to attract a steep 40 per cent GST.
Tobacco products: Pan masala, cigarettes, and tobacco items to draw 40 per cent GST; cigarettes will continue under 28 per cent GST plus compensation cess until loans are repaid.
Sugary drinks: Aerated beverages with added sugar will be taxed at 40 per cent.
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Revenue Secretary Arvind Shrivastava estimated the revenue impact at Rs 48,000 crore, but said buoyant collections would make the reforms fiscally sustainable.
Calling it a collective step for “ease of living and doing business,” Prime Minister Narendra Modi said the reforms will benefit farmers, MSMEs, the middle class, women and youth, while simplifying the tax structure for small traders.