GST Council Unveils Major Tax Overhaul to Ease Burden on Consumers and Drive Growth

In a significant move aimed at reducing the cost of living and boosting consumption, the GST Council, in its 56th meeting held in New Delhi, approved sweeping tax cuts across a wide range of goods and services. Finance Minister Nirmala Sitharaman announced that the changes will come into effect from September 22, aligning with the beginning of Navratri.

The revised GST structure simplifies tax rates to primarily two slabs - 5 percent and 18 percent while retaining a special 40 percent rate for luxury and sin goods. The tax on many daily-use consumer items such as hair oil, soaps, shampoos, toothpaste, bicycles, and kitchenware has been reduced to 5 percent.

In a major relief to the health sector, all individual life and health insurance policies, including ULIPs and policies for senior citizens, are now fully exempt from GST. Additionally, 33 life-saving drugs will now attract zero GST, while other medicines and medical devices will be taxed at a reduced rate of 5 percent.

Staple food items such as ultra-high temperature milk, paneer, chena, and all Indian breads are now tax-free. Packaged food products including namkeen, bhujia, instant noodles, pasta, sauces, chocolates, butter, ghee, cornflakes, and preserved meats will now fall under the 5 percent slab, down from 12 percent or 18 percent.

Consumer durables have also seen a rate cut. Items like air conditioners, televisions above 32 inches, dishwashers, small cars, and motorcycles (up to 350cc) will now attract 18 percent GST instead of the earlier 28 percent.

The agriculture sector has received a boost with the reduction of GST on all agricultural equipment from 12 percent to 5 percent. These reforms are expected to simplify compliance, address inverted duty structures, and stimulate economic growth while offering substantial relief to the middle class, farmers, and small businesses.