GST Revamp: Which Is More Expensive or Cheaper? View the Complete List Here

The rate overhaul, which limited slabs to 5% and 18%, was approved by the council.

India’s consumption tax has been completely overhauled since its inception in 2017 by the Goods and Services Tax (GST) Council on Wednesday. This includes lowering taxes on small cars, appliances, toothpaste, insurance, and even cement and toothpaste.

In an effort to increase domestic spending and lessen the financial impact of the US tariffs placed on Indian goods, the council approved the rate overhaul by capping slabs at 5% and 18%.

The council reduced the current four slabs – 5, 12, 18 and 28 per cent – to the two-rate structure of 5 per cent and 18 per cent.  A special 40 per cent slab is, however, 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.

What Reduces in Price?

Food and beverage

1. The current 5% tax on all types of chapati and paranthas will be reduced to 0%.
2. Additionally, the tax rate on ultra-high temperature milk, chena or paneer, pizza bread, and khakra has been lowered from 5% to 0%.
3. From butter and ghee to dry nuts, condensed milk, sausages and meat, sugar-boiled confectionery, jam and fruit jellies, tender coconut water, namkeen, drinking water in 20-liter bottles, fruit pulp or fruit juice, beverages made with milk, ice cream, pastries and biscuits, corn flakes and cereals, and sugar confectionery, the tax rate has been lowered from the current 18 percent to 5%.
4. Additionally, the 12% GST on cheese and other fats has been lowered to 5%.
5. The GST rate has been lowered from 18 percent to 5 percent, which will make plant-based milk drinks more affordable. The rate for soy milk drinks has also been lowered from 12 percent to 5 percent.

Household items

1. The rate will be lowered from 12% to 5% for items like combs, bicycles, bamboo furniture, umbrellas, utensils, feeding bottles, tableware, kitchenware, and tooth powder.
2. Shampoo, talc, toothpaste, toothbrushes, face powder, soap, and hair oil, which were reduced from 18% to 5%.
   

Household appliances

1. The current 28% tax on consumer electronics, such as TVs, dishwashers, and air conditioners, will drop to 18%.

Stationary items

1. Exercise books, notebooks, maps, charts, globes, pencils, sharpeners, crayons, and pastels will all be free of charge starting at 12%.
2. In a similar vein, erasers will cost nothing starting at 5%.

Footwear and textiles

1. Footwear and textiles have seen GST cut from 12 per cent to 5 per cent, reducing costs for mass-market products.

Healthcare

1. Rates for life-saving medications, health-related goods, and certain medical devices have decreased from 12% to 18% to 5% or zero.
2. The rates for thermometers, medical-grade oxygen, all diagnostic kits and reagents, glucometers, test strips, and corrective glasses have all been reduced from 18% to 5%.

Insurance and policies

1. Individual health and life insurance plans are exempt from taxes.
2. Third-party insurance services for the transportation of goods will now be eligible for 5% input tax credit (ITC) instead of 12%.

Hotel tariffs and flights

1. The GST rate was reduced from 12% with ITC to 5% without ITC. Room taxes up to Rs 7,500 are now only 5%.
2. Tickets in the economy class will only be subject to 5% GST.

Vehicles, auto components

1. The current 28 percent tax rate will be reduced to 18 percent for motorcycles up to 350cc.
2. While electronic vehicles will still be subject to a 5% GST fee, small hybrid cars will also benefit.
3. The current 28% GST slab on auto parts has been lowered to 18%.

Fuel usage

1. Petrol, LPG and CNG vehicles of less than 1,200 cc and not more than 4,000 mm length and diesel vehicles of up to 1,500 cc and 4,000 mm length, too, would move to 18 per cent rate from 28 per cent.

Construction

1. With the tax rate dropping from 28% to 18%, cement will be less expensive.

Sewing machines and parts

1. The GST rate has been reduced from 12% to 5%.

Agricultural machinery

1. The rate has been reduced from 12% to 5% for a variety of agricultural equipment, such as tractors (with the exception of road tractors for semi-trailers with engines larger than 1800 cc), hand pumps, nozzles for drip irrigation equipment and sprinklers, agricultural and horticultural machinery for soil preparation, harvesting and threshing equipment, composting machines, and diesel engines with fixed speeds that don’t exceed 15 HP.
2. Handpropelled vehicles, such as hand carts, and agricultural trailers that load themselves will also be subject to the rate.
3. The GST on important fertilizer inputs, such as ammonia, nitric acid, and sulfuric acid, has been lowered from 18% to 5%.
4. Since GST was lowered from 12% to 5%, a number of biopesticides, such as Bacillus thuringiensis varieties, Trichoderma viride, Trichoderma harzianum, Pseudomonas fluoresens, Beauveria bassiana, NPV of Helicoverpa armigera, NPV of Spodoptera litura, neem-based pesticides, and Cymbopogan, will become more affordable.
5. Additionally, GST on micronutrients covered by the Fertilizer Control Order of 1985 has been lowered to 5%.
6. Complete tractor parts, such as rear tractor tires and tubes, agricultural diesel engines with cylinder capacities greater than 250 cc for tractors, hydraulic pumps for tractors, and other tractor parts like the rear wheel rim, center housing, transmission housing, front axle support, bumpers, brake assembly, gear boxes, trans-axles, radiator assembly, and cooling system parts, will be reduced from 18% to 5%.

Beauty and physical well-being services 

1. Services of health clubs, salons, barbers, fitness centers, yoga, etc. will attract a GST rate of 5 per cent without ITC. These services attracted 18% GST earlier.

What Gets Costlier?

Aerated, caffeinated drinks

1. Popular soft drinks, such as Coca-Cola and Pepsi, along with other non-alcoholic beverages, will become costlier, with the council approving a hike in tax rate on carbonated beverages to 40 per cent from the current 28 per cent.
2. Caffeinated drinks will now cost 40% instead of 28%.
3. Since the GST rate on other non-alcoholic beverages has been raised from 18% to 40%, they will also become more expensive.
4. All products with added sugar, another sweetener, or flavoring (including aerated waters) will be subject to a 40% tax instead of the current 28%.

Vehicles

1. All automobiles above 1,200 cc and longer than 4,000 mm as well as motorcycles above 350 cc, yachts and aircrafts for personal use, and racing cars will attract a 40 per cent levy.

Tobacco items

1. Until the loans made to states to make up for revenue losses during the COVID-19 pandemic are paid back, tobacco and tobacco-related products will remain subject to a 28 percent GST rate plus a compensation cess. After that, a 40% GST rate will apply to tobacco and tobacco-related products.

Leisure activities

1. Additionally, services provided by race clubs, leasing or rental companies, casinos, gambling, horse racing, lotteries, and online money gaming will all be subject to the 40% tax. IPL tickets are included in this category as well.