Reduced taxes on daily items, vehicles, and hotels under GST overhaul
The GST Council has announced a significant overhaul of the Goods and Services Tax (GST) system, affecting various daily use and aspirational goods, as well as vehicles. The new rates will take effect on 22 September, except for tobacco and tobacco products, for which a separate date will be decided by the GST Council chairperson.
One of the most notable changes is the reduction in the tax burden on high-end automobiles with the expiry of the compensation cess. This means that the prices of small cars and motorcycles of up to 350 cc will see a decrease from 28% to 18%. Similarly, buses, three-wheelers, and ambulances will attract 18% instead of the present 28%.
The tax structure for pan masala, gutka, cigarettes, and chewing tobacco will now be based on the retail price instead of the transaction value. This is part of an effort to address health concerns related to these products.
In the realm of personal insurance, all individual life insurance policies and all health insurance policies, including family policies, will now be exempt from GST. This move is expected to provide relief to policyholders.
The council has also decided to reduce the GST on products like hair oil, shampoo, toothpaste, tableware, and kitchenware from either 12% or 18% to 5%. This will lead to a cooling effect on the prices of these items.
However, no consensus has been reached on new levies to address future revenue losses. States have expressed concerns over potential revenue shortfalls due to the tax cuts. Punjab finance minister Harpal Singh Cheema has called for an alternative compensation mechanism, and West Bengal finance minister Chandrima Bhattacharya anticipates an annual revenue loss of about ₹47,700 crore for her state. Jharkhand finance minister Radha Krishna Kishore has projected an annual loss of ₹2,000 crore for his state, mainly from the automobile and cement sectors.
Kishore has urged the Centre to consider the economic impact on states beyond the current compensation period. Himachal Pradesh's town & country planning minister Rajesh Dharmani has noted a projected cumulative revenue loss of $11.1 billion.
The GST Council has also announced tax cuts on various daily use and aspirational goods. Products like paneer and all forms of Indian breads will come down from 5% to zero. The prices of items like toothpaste, shampoo, dishwashers, television sets, and small and big cars will also be affected by these tax cuts.
The search results do not provide information about which governments opposed the GST Council's tax cuts or any proposed compensation measures for potential income losses. The GST Council has announced that it will implement the new tax changes on 22 September, except for tobacco and tobacco products.
Read also:
- Understanding Hemorrhagic Gastroenteritis: Key Facts
- Stopping Osteoporosis Treatment: Timeline Considerations
- Trump's Policies: Tariffs, AI, Surveillance, and Possible Martial Law
- Expanded Community Health Involvement by CK Birla Hospitals, Jaipur, Maintained Through Consistent Outreach Programs Across Rajasthan
