GST Gets A Makeover: 2 Slabs, Lower Prices And Simpler System

GST Council Approves Two-Tier Tax Structure Of 5% And 18%, Effective Sept 22

- OUR CORRESPONDENT

In one of the most sweeping tax reforms since the introduction of the Goods and Services Tax (GST) in 2017, the GST Council on Wednesday approved a complete restructuring of the indirect tax system. The overhaul will come into effect on September 22, coinciding with the start of Navaratri, and is expected to lower prices across a wide spectrum of goods and services, while reducing the burden of compliance for businesses.

The decision trims down the existing four-slab structure of 5, 12, 18 and 28 per cent to just two principal rates—5 per cent and 18 per cent. A separate 40 per cent bracket will apply only to a limited set of luxury and "sin" goods such as high-end cars, tobacco, aerated sugary drinks, racing cars, and yachts.

Prime Minister Narendra Modi said that wide-ranging reforms approved by the GST Council will improve lives of citizens and ensure ease of doing business for all, especially small traders and businesses.

Union Finance Minister Nirmala Sitharaman, who briefed reporters after the day-long meeting, said, "Every decision taken by the Council today was unanimous. No state registered any opposition. This is a significant step in simplifying the tax regime and making it more citizen-friendly."

Revenue Secretary Arvind Shrivastava added that the reforms, which will cost the exchequer an estimated Rs 48,000 crore, remain fiscally sustainable.

Household budgets are set to see immediate relief, with GST on a range of daily-use products being slashed. Basic food items including roti, paratha, pizza bread, khakra, paneer, and ultra-high temperature milk will now be exempt from tax. The Council has also decided to bring packaged butter, ghee, cheese, jams, dry fruits, fruit juices, confectionery, namkeens, ice cream, pastries, and biscuits into the 5 per cent slab, down from the earlier 12 or 18 per cent.