GST 2.0 To Kick In From Monday, Goods And Services To Get Cheaper

GST 2.0 To Kick In From Monday, Goods And Services To Get Cheaper

GST on most medications, formulations, and medical devices has been reduced to 5%.

New Delhi:

Starting Monday, the prices of numerous items ranging from kitchen essentials to electronics, medicines to automobiles will decrease as the newly reduced GST rates on approximately 375 items take effect.

In a significant benefit for consumers, the GST Council, which includes representatives from both the Centre and states, has implemented tax rate reductions on various goods and services beginning September 22 – coinciding with the first day of Navaratri.

Common household items such as ghee, paneer, butter, namkeen, ketchup, jam, dry fruits, coffee, and ice creams, along with consumer goods like TVs, air conditioners, and washing machines will become more affordable.

Several FMCG companies have already announced price reductions in response to the GST rationalization.

With GST on most medications, formulations, and medical devices such as glucometers and diagnostic kits reduced to 5 percent, healthcare costs will decrease for the average citizen. Additionally, construction projects will benefit from the reduction of GST on cement from 28 percent to 18 percent.

The government has instructed pharmacies to revise their Maximum Retail Prices or sell medicines at lower rates to pass on the GST reduction benefits.

Automobile purchasers stand to gain significantly from the GST rate cuts, with tax rates reduced to 18 percent and 28 percent for small and large vehicles, respectively.

Multiple automobile manufacturers have already announced price reductions.

In the service sector, GST on beauty and wellness services including health clubs, salons, barbers, fitness centers, and yoga has been reduced from 18 percent with Input Tax Credit (ITC) to 5 percent without tax credit.

Daily personal care products such as hair oil, toilet soap, shampoos, toothbrushes, and toothpaste are also expected to become cheaper as taxes on these items have been reduced from 12-18 percent to 5 percent.

Other everyday items including talcum powder, face powder, shaving cream, and after-shave lotions could also see price decreases as GST has been reduced from 18 percent to 5 percent.

Effective September 22, GST will adopt a two-tier structure where most goods and services will be taxed at either 5 or 18 percent. Ultra-luxury items will face a 40 percent tax, while tobacco and related products will remain in the 28 percent plus cess category.

Currently, Goods and Services Tax (GST) is implemented across four slabs of 5, 12, 18, and 28 percent. Additionally, a compensation cess is levied on luxury items and demerit or sin goods.

Finance Minister Nirmala Sitharaman stated last week that these GST reforms will inject Rs 2 lakh crore into the economy, providing people with more disposable income that would otherwise have been paid as taxes.

Approximately 99 percent of goods currently in the 12 percent GST bracket will move to the 5 percent category. This restructuring will also result in 90 percent of items from the 28 percent tax slab being moved to the 18 percent bracket.