Modi's tax reform set to cut levies on shampoos, hybrid cars and TVs

India plans to cut consumption tax by at least 10 percentage points on nearly 175 products ranging from shampoos and hybrid cars to consumer electronics, two sources said, revealing new details of Prime Minister Narendra Modi's tax overhaul.

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The biggest reform of the goods and services tax system in nearly a decade comes amid strained trade ties with the US, with Modi making repeated calls for increased use of Indian products.

Modi first flagged his reform plan last month on Independence Day when he said he would make daily products cheaper for people in the world's fifth largest economy.

His proposal includes reducing goods and services tax (GST) on consumer items such as talcum powder, toothpaste and shampoo from 18% to 5%, which is likely to boost sales at companies like Hindustan Unilever and Godrej Industries.

Air conditioners and television sets could see GST drop from 28% to 18% ahead of the Diwali shopping season starting in October, when brands like Samsung, LG Electronics, and Sony dominate sales.

India's GST council, which is headed by federal Finance Minister Nirmala Sitharaman and has representation from the country's states, is expected to finalise the list of items for tax cuts in a meeting on September 3-4.

The finance ministry did not immediately reply to an email seeking comments on this story.

The proposed tax cuts are also aimed at cushioning the expected fall in exports to the United States by boosting domestic consumption, helping raise farm incomes and encouraging self-reliance among Indian manufacturers.