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The Goods and Services Tax (GST) changes have come into effect from today, September 22. The government has introduced two major tax rates of 5 per cent and 18 per cent, while ultra-luxury and sinful items will be subject to a 40 per cent tax under the new structure.
On Sunday evening, Prime Minister Narendra Modi said, in an address to the nation, that the next-generation indirect tax cuts will boost investments while enhancing savings and happiness. *Navratri begins tomorrow. From the first day of Navratri, the country will take a step towards Atmanirbhar Bharat (self-reliant India),” said the Prime Minister.
Finance Minister Nirmala Sitharaman announced that the overhaul aims to inject approximately Rs 2 lakh crore into the economy by increasing the disposable income of consumers.
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GST 2.0: Here’s how a day in the life of a middle-class worker changes
The new GST system has reduced tax on around 370 items. These include lifesaving medicines and daily essentials.
Also Read: ‘Bachat utsav’ (savings festival) begins on September 22, to accelerate nation’s growth story: PM Modi on GST 2.0 rollout
Zero-tax bracket items
More than 50 items now come under the zero-tax bracket. These include UHT milk, khakhras, pre-packaged paneer, and breads like chapatis and parathas.
GST on these medicines reduced from 12% to 0%
33 essential drugs and therapies for conditions including cancer and rare diseases are now exempt from GST, while the tax rate on numerous other medicines has been reduced from 12 per cent to zero.
Medical devices, such as diagnostic kits and glucometers, now incur a GST of just 5 per cent.
GST on stationery
The levy on stationery items for schools and offices, including erasers, pencils, notebooks, and maps, has been removed.
Consumer staple goods
Prices for several consumer staples have dropped, including butter, biscuits, condensed milk, namkeen, jams, ketchup, juices, dry fruits, ghee, ice cream, and sausages.
Also Read- GST 2.0 Rate Cuts: Patanjali Foods reduces MRPs across categories—See new price list
Dry fruits and nuts
Almonds, cashews, pistachios, and dates, will now be taxed at 5 per cent instead of 12 per cent.
GST on these services
Services such as haircuts, salon treatments, yoga classes, gyms, and health clubs will also see reduced rates.
Zero-GST category products
Toiletries like soaps, shampoos, hair oil, face creams, and shaving cream also come under zero-GST category now.
28% to 18% GST on these items
GST on kitchen appliances and electronics, including air conditioners, televisions, washing machines, and dishwashers, has been reduced to 18 per cent from 28 per cent.
40%-GST category products
The government has merged cess into the GST base and imposed a 40 per cent levy on sin and luxury goods to offset revenue losses.
Cigarettes, bidis, pan masala, gutka, and other tobacco products are subject to the highest tax rate, along with aerated beverages such as Coca-Cola, Pepsi, and Fanta.
Large sport-utility vehicles and multipurpose vehicles exceeding 1,200 cc (petrol) or 1,500 cc (diesel) and measuring over 4 metres will now be taxed at 40 per cent, up from the previous rate of 28 per cent plus 22 per cent cess.
Also Read: GST 2.0 is Here: Tata Motors announces special post-tax rates, lines up benefits worth up to Rs 1,55,000—See price list
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