The Goods and Services Tax (GST) Council, in a marathon meeting on Wednesday, approved a landmark overhaul of the nation’s indirect tax system, moving to a two-tier rate structure of 5% and 18%. The new rates, which scrap the existing 12% and 28% slabs, will be implemented from September 22.
The decision was taken unanimously after a day-long meeting in the capital. “We’ve reduced the slabs. There shall be only two slabs, and we are also addressing the issues of compensation cess,” Union Finance Minister Nirmala Sitharaman announced, confirming there was no disagreement from any state.
Alongside the primary slabs, the Council has also proposed a special 40% rate for a select list of demerit, sin, and luxury goods, including high-end cars, tobacco, and aerated drinks.
“These reforms have been carried out with a focus on the common man. Every tax on the common man’s daily use items has gone through a rigorous review and in most cases the rates have come down drastically,” the Finance Minister added.
However, the sweeping changes are expected to have a significant impact on government revenue. West Bengal Finance Minister Chandrima Bhattacharya stated that the new structure will lead to an estimated revenue loss of ₹477 billion.
Here is a comprehensive list of items under the new GST slabs:
Items under 0% GST (Exempt)
- 33 Life-saving drugs and medicines, including those for cancer and rare diseases.
- Individual life insurance and health policies.
- Educational items: Maps, Charts, Globes, Pencils, Sharpeners, Crayons, Pastels, Exercise Books, Notebooks, and Erasers.
- Food items: Ultra-High Temperature (UHT) milk, pre-packaged and labelled Chena or paneer, Pizza bread, Khakhra, and Chapati or Roti.
Items under 5% GST
- Personal Care: Hair oil, Shampoo, Toothpaste, Toilet soap, Toothbrush, and Shaving cream.
- Food & Household: Butter, Ghee, Cheese & dairy spreads, Namkeens, and Utensils.
- Baby Products: Feeding bottles, napkins for babies, and clinical diapers.
- Household & Machinery: Sewing machines and parts.
- Medical Supplies: Thermometers, Medical grade oxygen, All diagnostic kits and reagents, Glucometers and test strips, and Corrective spectacles.
- Agriculture: Tractor tyres, parts, tractors, specified bio-pesticides, micro-nutrients, drip irrigation systems, and sprinklers. Also includes various agricultural, horticultural, or forestry machinery for soil preparation.
Items under 18% GST
- Automobiles:
- Petrol & Petrol Hybrid, LPG, CNG Cars (not exceeding 1200 cc engine capacity & 4000 mm length).
- Diesel & Diesel Hybrid Cars (not exceeding 1500 cc engine capacity & 4000 mm length).
- Three-wheeled vehicles.
- Motorcycles (350 cc & below).
- Motor vehicles for the transport of goods.
- Road tractors of engine capacity more than 1800 cc.
- Consumer Electronics & Durables:
- Air Conditioners.
- Televisions (above 32″) including LED & LCD TVs.
- Monitors & Projectors.
- Dish Washing Machines.
Items under 40% GST
- Tobacco & Related Products: Pan masala, Cigarettes, Gutka, Chewing Tobacco, Bidis, and Smoking pipes.
- Beverages: Aerated waters containing added sugar or flavour, Caffeinated beverages, and other Non-alcoholic beverages.
- Luxury Goods & Others:
- Motorcycles exceeding 350 cc.
- Aircraft for personal use.
- Yachts.
- Revolvers and pistols.
- Services: Betting, casinos, gambling, horse racing, lottery, and online money gaming.
