GST Council approves new rates: Check what's cheaper and costlier
What's the story
The Goods and Services Tax (GST) Council has approved changes to India's indirect tax structure, which will come into effect from September 22. The revised rates will make a wide range of daily-use goods cheaper, including food items, consumer goods, and renewable energy devices. However, sin goods and luxury items will continue to attract higher taxation under the new regime.
Price reduction
Major cuts on daily essentials
The GST Council has approved major cuts across multiple sectors, directly benefiting households and businesses. Under the new regime, milk products such as UHT milk will be tax-free while condensed milk, butter, ghee, paneer, and cheese have moved from 12% to 5% or nil in some cases. Other daily essentials like malt, starches, pasta, cornflakes, biscuits, chocolates, and cocoa products will see rates reduced from 12-18% to 5%.
Tax cuts
Dry fruits, sugar, and packaged foods
The new GST rates also bring down the tax on dry fruits and nuts like almonds, pistachios, hazelnuts, cashews, and dates from 12% to just 5%. Refined sugar, sugar syrups, confectionery items like toffees and candy have also been moved to the 5% bracket. Other packaged foods such as vegetable oils, animal fats, edible spreads, sausages, meat preparations, fish products, and malt extract-based packaged foods have also been shifted to the 5% slab.
Sectoral impact
Fertilizers, life-saving drugs to get cheaper
The new GST regime also brings down the tax on fertilizers from 12%/18% to 5%. Select agricultural inputs, including seeds and crop nutrients, have been rationalized from 12% to this slab. Life-saving drugs, health-related products, and some medical devices have seen rate cuts under the new regime. Educational services items such as books and learning aids have also seen a reduction in GST from 5%-12% to nil or just 5%.
Consumer benefits
Consumer goods sector benefits from new regime
The new GST regime also benefits the consumer goods sector with entry-level mass-use items like select appliances moving from 28% to just 18%. Footwear and textiles have seen a cut in GST from 12% to 5%, reducing costs for mass-market products. In the auto sector, small cars (1,200cc and under 4,000mm length) and motorcycles of up to 350cc will now attract a lower tax rate of just 18%, down from the previous rate of 28%.
Additional benefits
Construction inputs and renewable energy devices also see tax cuts
The new GST regime also brings down taxes on renewable energy devices, construction inputs, sports goods, toys, leather, wood, and handicrafts. All of these items have been brought into the 5% bracket under the new tax structure. This wide-ranging reduction in tax rates across multiple sectors is expected to provide relief to households, small businesses, and the aspirational middle class alike.
Tax retention
Sin goods remain untouched under new regime
Despite the broad-based relief, some goods and services will continue to be taxed at higher rates. A new 40% slab for sin and luxury goods has been introduced, ensuring that items like cigarettes, premium liquor, and high-end cars don't see tax relief. Sin goods include items such as pan masala, gutkha, cigarettes, chewing tobacco, zarda, unmanufactured tobacco, and bidi, which will continue under existing high GST rates and compensation cess until outstanding cess-linked loans are cleared.