GST overhaul: 12% and 28% slabs to be scrapped
Big changes are coming to how we pay taxes on daily essentials.
The GST Council, led by Finance Minister Nirmala Sitharaman and state finance ministers, plans to ditch the 12% and 28% GST slabs for a simpler two-rate system: 5% and 18%.
This is expected to roll out before the coming festive season.
What will be taxed at new rates?
Most goods currently taxed at 12%—like insulin, kitchenware, preserved veggies, and medicines—will soon be taxed at just 5%.
Everyday shopping could get lighter on your wallet.
Big-ticket items like some cars and appliances will shift from the steep 28% rate down to 18%.
Luxury items like tobacco will see tax hike
A bunch of sectors will feel the shift: things like condensed milk, tableware, granite, marble, and certain medicines drop to the new lower slab.
Meanwhile, luxury buys (think tobacco) jump to a new high of 40%, replacing the old cess system but keeping overall taxes steady.
States want compensation for revenue loss
While this overhaul should make taxes easier to understand—and maybe even help with inflation as festival season nears—states are asking for compensation if they lose revenue from these cuts.
The final rollout depends on these talks moving forward smoothly.