Festival cheer: New GST rates dawn on Sep 22

New tax slabs of 5% & 18%; 40% levy on sin & super luxury goods. | Personal health, life insurance policies exempted.

- MONIKA YADAV & ASIT RANJAN MISHRA

The Goods and Services Tax (GST) Council, chaired by Union Finance Minister Nirmala Sitharaman, on Wednesday reached a consensus to move to a simplified two-tier rate structure and exempt individual health and life insurance premiums from GST. However, Opposition-ruled states raised concerns about the lack of a clear-cut mechanism to compensate for the anticipated revenue implication of around ₹48,000 crore.

The new rates will take effect from September 22, the first day of Navratri.

Sitharaman said the reform was not only about rationalising rates. "It's also on structural reforms and for ease of living. We have corrected inverted duty structure problems. We have resolved classification-related issues and we have ensured that there is stability and predictability about the GST," she said.

As part of the rate rationalisation for the common man, GST on household articles such as soap, toothpaste, namkeen, chocolates, and coffee will fall to 5 per cent from either 12 per cent or 18 per cent. Similarly, GST on handicraft and agriculture-related goods such as tractors and composting machines will be cut from 12 per cent to 5 per cent. Renewable energy equipment such as biogas plants and windmills will also attract 5 per cent GST instead of the earlier 12 per cent.