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From cement to consumer durables, India prepares for sweeping GST reforms with two tax slabs, aiming to ease consumer burden and boost key sectors.
India is gearing up for its most significant tax reform since the introduction of the Goods and Services Tax (GST). Prime Minister Narendra Modi, in his Red Fort address, declared that the government is ready to roll out “next-generation GST reforms.” Preparations are already underway, with the Finance Ministry and the Fitment Committee working on the framework, ahead of a crucial GST Council meeting scheduled for September 3 and 4.
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At the core of the proposed changes is a radical restructuring of GST slabs. The Council is expected to retain only two tax rates, 5% and 18%, replacing the multiple-tier system. Sources indicate that food and textile products will likely move to the 5% bracket, making essentials cheaper.
In what could be a game-changer for industries and consumers alike, cement is set to shift from 28% to 18%, directly benefiting the real estate, construction, and infrastructure sectors. Salons and parlors may see GST fall from 18% to 5%, while consumer durables such as air-conditioners, refrigerators, and televisions could also move from 28% to 18%.
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Perhaps the most striking proposal is the removal of GST on health insurance premiums, dropping from 18% to zero, offering much-needed relief to families and boosting health coverage adoption.
On the other hand, luxury goods and harmful products like cigarettes and tobacco are expected to face higher taxes, with GST rates touching 40%, aimed at discouraging consumption.
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Government officials have clarified that while decisions will be made in early September, the new rates are expected to be implemented from September 22 after due notification. With reforms rolling out just before the festive season, consumers may witness reduced prices during Dasara.
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