Big GST rate changes likely as Council considers 2-slab system ahead of festive season
The 56th GST Council meeting, chaired by Finance Minister Nirmala Sitharaman, is underway with major reforms expected. The Council is likely to approve a simplified two-slab GST structure, slashing rates on a wide range of goods and services ahead of the festive season.
Prime Minister Narendra Modi recently hinted that a “Diwali gift” in the form of GST reforms may be on the cards.
Current GST Structure vs. Proposed Reform
| Current Slabs | Proposed Slabs |
|---|---|
| 5%, 12%, 18%, 28% | 5% and 18% (simplified) |
| Special Sin Tax | 40% (unchanged) |
Under the new structure:
- Many items taxed at 28% may drop to 18%
- Goods under 12% or 18% could be shifted to 5%
- A 40% sin tax will remain for select products (tobacco, luxury cars, etc.)
What Could Get Cheaper?
✅ Automobiles
- Small cars (under 1200cc) and motorcycles (under 350cc): 28% → 18%
- Auto parts: Likely rate cut to 18%
✅ Hospitality & Entertainment
- Hotel bookings up to ₹7,500/night: 12% → 5%
- Movie tickets: 12% → 5%
✅ Healthcare
- Cancer drugs: May become GST-exempt
- Essential medicines & supplies: 12% → 5%
- Health and life insurance (individuals): May be exempted
✅ Daily-Use Items
- Paneer, cheese, butter, pasta, ice cream, coconut water, pizza bread, khakra, fruit juices: 12% → 5% or 0%
✅ Agriculture
- Sulphuric acid, nitric acid, ammonia: 18% → 5%
✅ Textiles
- Synthetic yarns, carpets, handicrafts: 12% → 5%
✅ Green Products
- Solar cookers: 12% → 5%
✅ Stationery
- Erasers: 12% → 0%
- Notebooks, atlases, maps: 12% → 5%
✅ Toiletries
- Toothpowder: 12% → 5%
- Toothpaste: 18% → 12%
- Shampoo, soap, hair oil: 18% → 5%
✅ Others
- Umbrellas: To fall under 5%
What May Get Costlier?
❌ Luxury and Sin Goods
- Tobacco, pan masala, luxury cars: New 40% sin tax
❌ Electric Vehicles (EVs)
- EVs priced ₹20–40 lakh: 5% → 18%
- Luxury EVs (₹40 lakh+): To attract 40% sin tax
❌ Coal & Energy Products
- Coal: 5% → 18% (due to cess removal)
❌ Apparel
- Clothes priced over ₹2,500 per piece: 12% → 18%
Impact on Economy
- Middle-class spending boost expected
- Estimated revenue loss of ₹50,000 crore
- Likely to increase consumption, offsetting revenue loss
- Encourages private sector investments
- Revised GST rates may take effect from September 22
If approved, the GST Council’s proposed changes could significantly ease the cost burden for consumers, especially ahead of the festive season. While rate cuts on essential and daily-use items may boost household spending, higher taxes on luxury and sin goods aim to balance revenue. All eyes are now on the final decisions as businesses and consumers await clarity on what gets cheaper—and what doesn’t.
Also Read : Big Story: GST Changes May Cut Prices of Daily-Use Items — Middle Class Could Get Big Relief
