NEW PROPOSED GST RATES - What is new?
NEW GST RATES- How India's New GST Changes
Will Affect Everyday Items
Important concepts
i.
GST Council:
Goods & Services Tax Council (GST Council) is a
constitutional body for making recommendations to the Union and State
Government on issues related to Goods and Service Tax. The Council is a joint forum of the centre and the
states.
ii.
SIN Goods
Sin goods are products that are considered
harmful to individuals or society, often associated with negative
externalities. Common examples include tobacco, alcohol, and gambling.
Introduction
The big news came from
the finance Minister on the day of 79th Independence Day regarding the
upcoming proposal to simplify GST rates. In its a social media post on X, the Finance Ministry explained that the plan is to have a simpler
indirect tax regime with 'two slabs — standard and merit' — as compared to its
current variable GST rates. For a common man’s understanding, the
existing four ( 5%,12%,18% and 24%) will be reduced to only two rates viz.5%
and 18%. As of now our GST rate of 28 % is the highest among the 140 countries
in the world.
Principles of Rate Rationalisation
1.
Simple
tax which has two components- a special
concessions and de-merit goods
2.
Raleated
to common man.,the essential goods such as food,medicine,education and daily
use goods will be levied at 5 %
3.
For
farmers- to reduce rates of farming equipments.
4.
For
Middle class-lower rates for white goods such as Refridirator and washing
machines.
5.
Compensation
cess- its removal will provide greater fiscal space and flexibility.
Currently we have the following:
Ø Essential food- Exempted
Ø Daily use items - 5%
Ø Standard goods- 12%
Ø Electronics and services - 18%
Ø Luxury and sin goods at 28%.
What are the proposed rates?
|
Present rates |
Proposed rates |
Examples |
|
Exempted
goods |
No
Change |
Milk,Egg,Curd,Educational
services Health Care Services etc. |
|
Special
rates 0.25% & 3% |
No
Change |
Gold-
3% and precious stones-0.25% |
|
5% |
No
change |
coal, edible oils, tea, domestic LPG, and life-saving drugs. |
|
12% |
Nearly
99% of goods in 5% |
Butter, ghee, computers, fruit juice, and packed coconut
water. |
|
12% |
Balance 1% goods in 18% |
|
|
18% |
18% |
hair oil, capital goods, toothpaste, industrial
intermediaries, and toiletries. |
|
28% |
To
be abolished , some to be shifted to 18% |
Small
car, high end Motor Bikes,BMW,Cigarares,A/C,Refrrigirator,Accomodationin 5
star hotel,theme parks,Cenemas,Casions etc. |
|
New
Slab |
40%
for 5-7 sinned goods |
|
Source: The Business Line, 16 Aug.
25
For more details
as to GST Rates applicable to goods:
Click:
https://cleartax.in/s/gst-rates
Key Takeaways
Ø There will be only two slab rates: Standard and Merit
Ø 99% of the goods which are under 12 % category will be
shifted to 5%.
Ø 90% of goods which are in 28% slab rate category will
be shifted to 18% slab rate(goods like Refrigirator & Air Conditioners)
Ø The new structure is expected to feature two main
rates — 5% and 18% — along with a special 40% rate for luxury and sin goods.
Conclusion
The proposed GST rationalization marks a significant step towards
simplifying India's complex indirect tax system. By abolishing the 12% and 28%
slabs, the new structure will be anchored by two main rates: 5% (merit) and 18%
(standard). This move is designed to benefit the common citizen by shifting
most daily-use items and key white goods like refrigerators into lower tax
brackets. While a new 40% slab will target a handful of sin goods, the
overarching goal is to create a more efficient, transparent, and
consumer-friendly tax regime that eases the burden on households and farmers.
Note: It is not AI generated content.
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