New Delhi: India’s taxation system is set to witness a major shake-up as the new Goods and Services Tax (GST) reforms roll out from September 22. With just two main slabs of 5 per cent and 18 per cent, along with a special 40 per cent slab for sin goods, the move marks a historic shift in the country’s indirect tax structure. Announced by the GST Council under Finance Minister Nirmala Sitharaman earlier this month, the changes are aimed at making taxes simpler, encouraging consumption, and ensuring fairer rates for all.
5% slab – For essential goods.
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18% slab – For most other goods and services.
40% slab (Sin Tax) – For luxury and sin goods such as tobacco, alcohol, betting, and online gaming.
This consolidation aims to simplify tax compliance and could also bring relief to consumers, as many items currently taxed at 12 per cent or 28 per cent may become cheaper. ()
Everyday Essentials
– Toothpaste, soaps, and shampoos
– Packaged foods like biscuits, snacks, and juices
– Dairy items such as ghee and condensed milk
– Bicycles and stationery
– Apparel and footwear below a certain price point
Household Appliances & Electronics
– Air conditioners
– Refrigerators and dishwashers
– Large-screen televisions
– Cement (important for housing and construction)
Automobiles
– Small cars (engine size below 1,200cc) may shift from 28 per cent to 18 per cent GST
– Two-wheelers could also move to a lower slab
– Luxury cars and SUVs will continue to face higher taxes
Insurance & Financial Services
– Insurance premiums (currently at 18%) may fall under a lower slab or be exempted
– Tobacco, alcohol & pan masala – Stay under the 40 per cent “sin tax” slab.
– Online betting & gaming – Continue to face the highest tax rate.
– Petroleum products – Excluded from GST, so no price relief on petrol, diesel, or LPG.
– Luxury items – Diamonds, precious stones, and other high-end goods will remain expensive.
The GST reform is expected to give a big boost to India’s economic activity. With lower taxes on essentials, appliances, and vehicles, households are likely to spend more, especially during the festive season. The stock market has already responded positively, with the Nifty 50 climbing over 1 per cent and auto as well as consumer goods stocks witnessing sharp gains. ()
– Cheaper Shopping Baskets – Daily-use products like soaps, snacks, and packaged foods will cost less.
– Big-Ticket Savings – Cars, air-conditioners, and televisions become more affordable, especially for first-time buyers.
– Financial Relief – Lower insurance premiums will help reduce monthly household expenses.
– Business Ease – Small and medium enterprises benefit from simpler tax compliance, making operations smoother.
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