Summary of this article
The 56th GST Council meeting cleared the two-slab structure, replacing the existing 4-tier system
Several daily-use items will get cheaper, while certain luxury and ‘sin goods’ will get dearer
The new GST rates will come into effect from September 22
Finance Minister Nirmala Sitharaman on September 3 announced sweeping Goods and Services Tax (GST) rate cuts on several items across different categories. The new GST rates will come into effect from September 22.
The restructuring brings most goods and services under the standard rate of 18 per cent, a merit rate of 5 per cent and several other items under nil (0 per cent). Additionally, certain discretionary and luxury goods and services have been moved to special de-merit rate of 40 per cent.
This means several daily-use items will become cheaper, giving some relief to the middle class. At the same time, certain discretionary and luxury goods will get more expensive under the new structure.
So what has become cheaper after the rate cuts? Which items will face higher tax rates, and will now be dearer? Here's the full list:
What Gets Cheaper
Everyday Essentials
18% to 5%
Hair oil, shampoo, toothpaste, toilet soap bars, toothbrushes and shaving cream have been moved from the 18 per cent GST slab to 5 per cent.
12% to 5%
Butter, ghee, cheese, dairy spreads, pre-packaged namkeens, bhujia, mixtures, utensils, feeding bottles, napkins for babies, clinical diapers, and sewing machines with parts will now be taxed at 5 per cent instead of 12 per cent.
Agriculture and Fertilisers
18% to 5%
Tractor tyres and parts have been shifted from the 18 per cent GST slab to 5 per cent.
12% to 5%
Several agricultural inputs and equipment are now in the 5 per cent slab, down from 12 per cent earlier. These include tractors, specified bio-pesticides, micro-nutrients, drip irrigation systems, sprinklers, and machines used in agriculture, horticulture and forestry for soil preparation, cultivation, harvesting and threshing.
Fertilisers like sulphuric acid, nitric acid and ammonia will also now attract 5 per cent GST instead of 12 per cent.
Education
12% to Nil
Maps, charts and globes have been exempted from GST. Pencils, sharpeners, crayons, pastels, exercise books and notebooks have also been moved from the 12 per cent slab to nil.
5% to Nil
Erasers, which were earlier taxed at 5 per cent, will now attract no GST.
Automobiles
28% to 18%
Several automobile segments have seen GST reduced from 28 per cent to 18 per cent. Petrol and petrol-hybrid cars using LPG or CNG with engine capacity up to 1,200 cc and length up to four metres now fall under the lower slab. Diesel and diesel-hybrid cars with engine capacity up to 1,500 cc and length up to four metres have also been moved to 18 per cent.
Three-wheeled vehicles are now taxed at 18 per cent instead of 28 per cent. Motorcycles with engine capacity up to 350 cc and motor vehicles used for transport of goods have also been shifted to the 18 per cent slab.
Pharma and Healthcare
18% to 5%
Thermometers have been shifted from the 18 per cent slab to 5 per cent. Various medical apparatus and devices used in medical, surgical, dental and veterinary practices, as well as those used for physical or chemical analysis, will now be taxed at 5 per cent instead of 18 per cent.
12% to 5%
Medical-grade oxygen, diagnostic kits and reagents, glucometers with test strips, and corrective spectacles have been reduced from 12 per cent to 5 per cent. All other drugs and medicines that previously attracted 12 per cent GST will now fall under the 5 per cent slab. Medical equipment and supplies such as wadding gauze, bandages and blood glucose monitoring systems will also be taxed at 5 per cent.
12% to Nil
Thirty-three lifesaving drugs and medicines, including those used for treatment of severe chronic conditions, are now fully exempt from GST.
5% to Nil
Three lifesaving medicines used in the treatment of cancer, rare diseases and other critical illnesses have been exempted from GST, down from 5 per cent earlier.
Consumer Services and Electronics
18% to 5%
Beauty and personal care services such as gyms, salons, barber shops and yoga centres have been moved from the 18 per cent slab to 5 per cent.
28% to 18%
Air-conditioners, televisions above 32 inches, dishwashers, monitors, projectors and other white goods have seen GST reduced from 28 per cent to 18 per cent.
Insurance
18% to Nil
All individual life insurance and health insurance policies, including family floater and senior citizen plans, have been exempted from GST. These services earlier attracted 18 per cent tax but will now be completely tax-free.
Textile
18% to 5%
The GST rate on manmade fibre has been reduced from 18 per cent to 5 per cent.
12% to 5%
Manmade yarn, which was earlier taxed at 12 per cent, will now attract 5 per cent GST.
Renewable Energy
12% to 5%
Devices used in renewable energy, along with components for their manufacture, will now be taxed at 5 per cent instead of 12 per cent.
Construction
28% to 18%
Cement has been shifted from the 28 per cent slab to 18 per cent.
Hospitality
12% to 5%
Hotel accommodation priced up to Rs 7,500 per day will now fall under the 5 per cent GST slab, reduced from 12 per cent earlier.
What Gets Dearer
Tobacco Products
28% to 40%
Tobacco items including pan masala, gutkha, cigarettes, chewing tobacco such as zarda, unmanufactured tobacco, bidi and scented tobacco will now attract a higher GST of 40 per cent, up from 28 per cent. Cigars, cheroots and cigarillos have also been moved to the 40 per cent slab.
Sugary and Flavoured Drinks
28% to 40%
Sugary and flavoured beverages, including aerated waters with added sugar, have been shifted from the 28 per cent bracket to the highest slab of 40 per cent.
Luxury Automobiles
28% to 40%
Luxury and premium cars with petrol engines above 1200 cc and diesel engines above 1500 cc will now attract 40 per cent GST, compared with the earlier rate of 28 per cent.
Transportation and Miscellaneous Items
28% to 40%
Select luxury and transport-related goods and services have been moved into the 40 per cent category. Imported personal-use articles and other high-taxed miscellaneous items have also been shifted from the 28 per cent slab to 40 per cent. The detailed list will be notified under the Harmonised System of Nomenclature (HSN) codes.
