The council sanctioned the rate revision by restricting brackets to 5 percent and 18 percent.

The Goods and Services Tax (GST) Council on Wednesday authorized a comprehensive revamp of India's consumption tax since its inception in 2017, reducing duties on daily necessities, pharmaceuticals, compact vehicles, and appliances, impacting a wide range from toothpaste and insurance to tractors and cement.

The council sanctioned the rate revision by capping slabs at 5 per cent and 18 per cent, as the Centre aims to enhance domestic consumption and alleviate the economic impact of US tariffs on Indian products.

The council changed the existing four rates - 5, 12, 18, and 28 per cent - to a simplified two-rate system of 5 per cent and 18 per cent. A specific 40 percent rate is, nonetheless, suggested for a limited number of products like luxury vehicles, tobacco, and cigarettes.

The revised rates for all items, excluding pan masala, gutkha, cigarettes, chewing tobacco products such as zarda, unmanufactured tobacco, and bidi, will take effect on September 22.

What Becomes Less Expensive?

Cuisine and drinks

All types of chapati and paranthas will incur no tax, reduced from the existing rate of 5 percent.

The tax rate has been reduced to zero from 5 percent on ultra-high temperature milk, chena or paneer, pizza bread, and khakra.

Frequently used food products and drinks, extending from butter and ghee to dry nuts, condensed milk, sausages and meats, sugar-based candies, jams and fruit jellies, tender coconut water, namkeen, drinking water in 20-litre containers, fruit pulp or juices, milk-based beverages, ice cream, pastries and biscuits, corn flakes and cereals, along with sugar candies, with a reduced tax rate to 5 percent from the existing 18 percent.

The GST on various fats and cheese has been decreased to 5 percent from 12 percent.

Milk alternatives made from plants will see a price decrease as the GST rate drops from 18 per cent to 5 per cent, and the rate for soya milk beverages has also been lowered to 5 per cent from 12 per cent.

Domestic belongings

Products like tooth powder, feeding bottles, tableware, kitchenware, umbrellas, utensils, bicycles, bamboo furniture, and combs will experience a reduction in the rate from 12 percent to 5 percent.

Shampoo, talcum powder, toothpaste, toothbrushes, face powder, soap, and hair oil will see a reduction to 5 percent from 18 percent.

Home devices

Consumer electronics such as air-conditioners, dishwashers, and TVs will be levied at 18 percent instead of the present 28 percent.

Office supplies

Maps, charts, globes, pencils, sharpeners, crayons and pastels, exercise books and notebooks will incur no charge from 12 percent.

In the same way, erasers will be priced at zero from 5 percent

Shoes and fabrics

Footwear and textiles have experienced a GST reduction from 12 percent to 5 percent, lowering expenses for mainstream items.

Medical care

Essential medications, health products, and certain medical devices have experienced reductions in rates from 12 percent/18 percent to 5 percent or none.

The tariff on thermometers has been reduced from 18 per cent to 5 per cent, while medical-grade oxygen, all diagnostic kits and reagents, glucometers and test strips, and corrective glasses have seen a decrease from 12 per cent to 5 per cent.

Coverage and regulations

Personal life and health insurance plans to draw zero tax.

The service provided for third-party insurance of goods transportation will now be subject to a 5 percent rate with input tax credit (ITC), down from 12 percent with ITC.

Hotel rates and airfares

The GST has been reduced from 12 percent with ITC to 5 percent without ITC. The tax on accommodations priced below Rs 7,500 has been lowered to 5 percent.

Economy class fares to draw only 5 percent GST.

Automobiles, automotive parts

Motorcycles with an engine capacity of up to 350 cc will be taxed at 18 percent instead of the current 28 percent.

Compact hybrid vehicles will also gain advantages, while electric cars will remain subject to 5 percent GST for charging.

The GST on auto parts has been lowered to 18 percent from the existing 28 percent rate.

Consumption of fuel

Petrol, LPG, and CNG vehicles under 1,200 cc and with a length not exceeding 4,000 mm, along with diesel vehicles up to 1,500 cc and 4,000 mm long, will change from 28 percent to 18 percent.

Building

Cement prices will decrease as the tax rate falls from 28% to 18%.

Stitching devices and components

GST rate reduced from 12 percent to five percent

Farming equipment

The percentage has been reduced from 12 per cent to 5 per cent on several agricultural machines, encompassing fixed speed diesel engines with power not exceeding 15HP, hand pumps, drip irrigation nozzles and sprinklers, machinery for soil cultivation, harvesting and threshing equipment, composting machines, and tractors (excluding road tractors for semi-trailers with engine capacity over 1800 cc).

The rate will similarly apply to self-loading farm trailers and manually operated vehicles such as hand carts.

The GST on essential fertiliser components, such as sulphuric acid, nitric acid, and ammonia, has decreased from 18 per cent to 5 per cent.

Several biopesticides such as Bacillus thuringiensis variants, Trichoderma viride, Trichoderma harzianum, Pseudomonas fluorescens, Beauveria bassiana, NPV of Helicoverpa armigera, NPV of Spodoptera litura, neem-based pesticides, and Cymbopogon will become less expensive due to the reduction of GST from 12 percent to 5 percent.

The GST on micro-nutrients listed under the Fertiliser Control Order, 1985, has been lowered to 5 per cent.

Extensive tractor parts, comprising rear tractor tyres and tubes, agricultural diesel engines with a cylinder capacity greater than 250 cc for tractors, hydraulic pumps for tractors, and assorted tractor components like rear wheel rims, centre housings, transmission housings, front axle supports, bumpers, brake assemblies, gear boxes, trans-axles, radiator assemblies, and cooling system components, to become more affordable with a price decrease from 18 percent to 5 percent

Services for beauty and physical health

Services provided by health clubs, salons, barbers, fitness centers, yoga, etc. will incur a GST charge of 5 percent without ITC. These services were subject to an 18% GST previously.

What Becomes More Expensive?

Carbonated, caffeinated beverages

Well-known soft drinks like Coca-Cola and Pepsi, along with various non-alcoholic beverages, will see increased prices as the council has approved raising the tax rate on carbonated drinks to 40 percent from the existing 28 percent.

Caffeinated drinks will see an increase in charges from 28 percent to 40 percent.

Other non-alcoholic drinks will also see a price hike, as the GST rate on these products has risen from 18 per cent to 40 per cent.

All products (including carbonated beverages) with added sugar or other sweeteners or flavored will be taxed at 40 percent instead of the current 28 percent.

Automobiles

All cars exceeding 1,200 cc and measuring more than 4,000 mm, along with motorcycles over 350 cc, personal yachts, aircraft, and race cars will incur a 40 percent tax.

Tobacco products

Tobacco and related products will remain subject to a 28 per cent GST rate alongside a compensation Cess until the loans provided to compensate states for revenue loss during the Covid-19 pandemic are fully repaid. After that, tobacco and tobacco-associated items will face a 40 percent GST rate.

Recreational pursuits

A 40 percent tax will be imposed on services provided by a race club, as well as on leasing or rental services, and casinos/gambling/horse racing/lottery/online money gaming. Tickets for the IPL are included in this category as well