GST Council Meeting: With Two-Slab System, Rate Cuts On Agenda, Cheaper Goods Likely Ahead of Festive Season

The 56th Goods and Services Tax (GST) Council meeting, led by Finance Minister Nirmala Sitharaman, is expected to simplify tax slabs and reduce rates on numerous goods and services, reported NDTV.

The Council may move from a four-slab system to a two-slab structure, potentially making many items cheaper before the festive season.

Prime Minister Narendra Modi previously stated that countrymen could expect a "Diwali gift" in the form of GST reforms.

Majority of items currently at 28 per cent may drop to 18 per cent, while those at 18 per cent could fall to 12 per cent or 5 per cent. A special 40 per cent "sin tax" will remain on products like tobacco and luxury cars.

Several sectors could benefit from these changes. GST on small cars, motorcycles, and auto parts may decrease from 28 per cent to 18 per cent.

Hotel stays, movie tickets, and everyday goods like paneer, butter, cheese, and ice cream could become cheaper, with rates potentially dropping from 12 per cent to 5 per cent.

Healthcare is also a focus, with cancer drugs possibly becoming exempt from GST and other medicines and medical supplies moving to a 5 per cent rate. Further, health and life insurance could be moved to lower slabs or exempt.

Stationery, textiles, and solar cookers may also see rate reductions.

However, some items may face higher costs. The new 40 per cent sin tax could affect luxury automobiles, while four-wheeled electric vehicles (EVs) priced between Rs 20-40 lakh could see a rate increase from 5 per cent to 18 per cent.

Coal and certain energy products may also become more expensive. Apparel over Rs 2,500 could shift from 12 per cent to 18 per cent.

The government is optimistic that the policy will invigorate market activity, even with an estimated revenue shortfall of Rs 50,000 crore.

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