From paratha to cars: Complete list of what’s cheaper & costlier after GST overhaul

New Delhi, Sept 4: In a decision set to impact households and businesses alike, the GST Council on Wednesday approved a major overhaul of India’s Goods and Services Tax (GST) regime, simplifying the existing four-tier system to just two rates — 5% and 18% — effective September 22, the first day of Navaratri.

The reform will see almost all personal-use items, from roti and parathas to hair oil, ice creams, and televisions, becoming cheaper.

Additionally, the tax incidence on personal health and life insurance premiums will be brought down to nil, providing direct relief to consumers.

Union Finance Minister Nirmala Sitharaman, briefing the press after a marathon day-long meeting, said all decisions were taken unanimously, with no state raising objections.

“The panel has approved simplifying GST from four slabs — 5%, 12%, 18%, and 28% — to a two-rate structure of 5% and 18%,” she said.

A special 40% tax slab will continue to apply to select items, including high-end cars, tobacco, and cigarettes. Gutka, tobacco products, and cigarettes will maintain the current 28% rate along with a compensation cess until loans taken to offset state revenue losses are fully repaid.

Revenue Secretary Arvind Shrivastava said the financial impact of the rate rationalisation is estimated at Rs 48,000 crore, a figure considered fiscally sustainable.

“The GST reforms will bring down overall insurance premiums as the tax component has significantly reduced,” he noted.

The move is aimed at boosting domestic consumption, which accounts for 61.4% of India’s nominal GDP, and cushioning the economy against external shocks, including a 50% tariff on Indian exports to the United States — the highest globally.

Economic analysts estimate that the GST overhaul could lift GDP growth by up to 0.5 percentage points by the second year of implementation.

The GST simplification, first announced by Prime Minister Narendra Modi in his Independence Day speech, is expected to make compliance easier for businesses while leaving more disposable income in the hands of consumers.

Here is the complete list of items and their respective tax slabs under the new GST regime

What gets cheaper

Nil Tax (0%)

• Daily use food items (unchanged)
• Ultra-high temperature milk, paneer, pizza bread, khakra, plain chapati/roti
• Paratha (was 18%)
• Erasers, maps, pencil sharpeners, exercise books
• Life and health insurance policies

5% Tax

• Common food & beverages: butter, ghee, dry nuts, condensed milk, cheese, figs, dates, avocados, citrus fruits, sausages, meat, sugar boiled confectionery, jam, fruit jellies, tender coconut water, namkeen, 20-litre bottled water, fruit pulp/juice, milk-based beverages, ice cream, pastry, biscuits, corn flakes, cereals, sugar confectionery
• Consumer goods: tooth powder, feeding bottles, tableware, kitchenware, umbrellas, utensils, bicycles, bamboo furniture, combs
• Personal care: shampoo, talcum powder, toothpaste, toothbrushes, face powder, soap, hair oil
• Third-party insurance of goods carriage (was 12% with ITC)
• Electric vehicles (unchanged)

18% Tax

• Cement (was 28%)
• Small petrol/LPG/CNG vehicles (<1200cc, ≤4000mm length)
• Small diesel vehicles (<1500cc, ≤4000mm length)
• Motorcycles ≤350cc
• Consumer electronics: ACs, dishwashers, TVs

What Remains Costly / High Tax

40% Tax

• Automobiles >1200cc or >4000mm length
• Motorcycles >350cc
• Yachts, aircraft for personal use, racing cars
• Aerated drinks with added sugar
• Services: race clubs, leasing/rental, casinos/gambling/horse racing/lottery/online money gaming

28% + Compensation Cess

• Tobacco, gutka, cigarettes, and other tobacco product

PTI