GST Bonanza
After a long wait the GST reforms have been set in motion and right from the announcement the common man felt a sigh of relief as his daily use items will see a decline in costs.
The common use items from bread (roti) and paratha to hair oil, ice creams and TVs will cost less, while tax incidence on personal health and life insurance will be brought down to nil.
Approved by the powerful GST Council, the complete overhaul of the tangled Goods and Services Tax (GST) regime has limited slabs to 5 per cent and 18 per cent, effective from September 22, the first day of Navaratri.
Almost all personal-use items and aspirational goods for the middle class, like AC, washing machines, will see rate cuts as the government looks to boost domestic spending and cushion the economic blow of the US tariffs.
Premium paid for individual life insurance and health insurance (including family floater), policies too have been exempted from GST. Earlier, such policies were subject to 18 per cent GST.
Notably, the panel approved simplifying the GST from the current four slabs – 5, 12, 18 and 28 per cent, to a two-rate structure – 5 and 18 per cent. A special 40 per cent slab is also proposed for a select few items such as high-end cars, tobacco and cigarettes.
The new rates for all products, except pan masala, gutkha, cigarettes, chewing tobacco products like zarda, unmanufactured tobacco and bidi, will be effective September 22.
Such tobacco and tobacco-related products will continue to be subject to a 28 per cent GST rate plus a compensation Cess till the time the loans taken to compensate states for loss in revenue during COVID years are repaid. The loans are expected to be repaid by the end of the calendar year.
Notably, the clarity brought in the GST tax regime will ease compliance, reduce litigation, and give businesses and consumers much-needed predictability.
The Industry will surely see the as a phenomenal milestone. By lowering rates on everyday items and critical inputs, the reforms provide immediate relief to families and strengthen the foundation for growth.
