The 56th GST Council meeting, chaired by Finance Minister Nirmala Sitharaman, commenced on September 3 and is scheduled to conclude on September 4. The Council is reviewing tax reforms aimed at reducing GST rates on common-use goods and restructuring slabs for various products.
Here are 10 key points from the discussions:
- New GST Slabs: Punjab Minister Harpal Singh Cheema stated that the Council is likely to introduce two new GST slabs — 5% and 18% — along with a special slab, while removing one existing slab. Bihar Deputy CM Samrat Chaudhary said the new rates may be implemented from September 22.
- Health Insurance: The Council is considering bringing health insurance under the 5% GST slab, which could provide relief to policyholders. Insurers, however, may see a short-term impact on profits due to slower repricing of existing policies, according to HSBC.
- Footwear & Apparel: Items priced up to ₹2,500 may fall under the 5% slab, up from the current threshold of ₹1,000.
- Daily Use Items: Nil-tax items, including unpacked daily-use food products, are expected to continue receiving exemptions.
- Common Food & Beverages: GST on several everyday food items may be reduced from 18% to 5%, including butter, ghee, dry nuts, condensed milk, sausages, meat, jam, fruit jellies, tender coconut water, 20-litre bottled drinking water, fruit pulp, beverages containing milk, ice cream, pastries, biscuits, corn flakes, and cereals.
- Personal Care Products: GST rates on shampoo, talcum powder, toothpaste, toothbrushes, face powder, soap, and hair oil may also be reduced from 18% to 5%.
- Vehicles & Electronics: Discussions include reducing GST on:
- Petrol, LPG, and CNG cars (<1,200 cc, <4,000 mm) and diesel cars (<1,500 cc, <4,000 mm) from 28% to 18%
- Motorcycles up to 350 cc
- Consumer electronics such as ACs, dishwashers, and TVs from 28% to 18%
- Property & Cement: GST on cement is likely to fall from 28% to 18%, making construction materials cheaper.
- High-Value Apparel & Footwear: GST on items priced above ₹2,500 may increase from 12% to 18%.
- Luxury & ‘Sin’ Goods: The Council may impose a 40% GST on high-end automobiles, motorcycles above 350 cc, yachts, aircraft for personal use, station wagons, racing cars, and smoking pipes. Tobacco and other ‘sin’ goods will continue attracting 40% GST.
The Council’s announcements are expected to significantly impact pricing across multiple sectors, ranging from daily essentials to luxury goods, providing relief to consumers while maintaining higher taxes on premium products.
