GST 2.0 comes into effect; taxes lowered on 370 items, including staples, medicines

New Delhi, Sept 22: India's revamped Goods and Services Tax system, dubbed next-generation GST or "GST Bachat Utsav", came into effect on Monday, reducing taxes on around 370 products, including daily essentials and lifesaving medicines.

Over 50 items, including UHT milk, khakhras, pre-packaged paneer, and breads like chapatis and parathas, will now fall under a zero-tax bracket due to the new structure.

Thirty-three essential drugs and therapies for conditions including cancer and rare diseases are now exempt from GST, while the tax rate on numerous other medicines have been reduced from 12% to zero. Medical devices, such as diagnostic kits and glucometers, now incur a GST of just 5%.

The levy on stationery items for schools and offices, including erasers, pencils, notebooks, and maps, has been removed.

Prices for several consumer staples have dropped, including butter, biscuits, condensed milk, namkeen, jams, ketchup, juices, dry fruits, ghee, ice cream, and sausages.

Dry fruits and nuts, including almonds, cashews, pistachios, and dates, will now be taxed at 5% instead of 12%.

Cement for housing is now set at 18 %, down from 28 %. Services such as haircuts, salon treatments, yoga classes, gyms, and health clubs will also see reduced rates.

Additionally, the zero-GST category now includes toiletries like soaps, shampoos, hair oil, face creams, and shaving cream

GST on kitchen appliances and electronics, including air conditioners, televisions, washing machines, and dishwashers, has been reduced to 18% from 28%.

The government has merged cess into the GST base and imposed a 40% levy on sin and luxury goods to offset revenue losses.

Cigarettes, bidis, pan masala, gutka, and other tobacco products are subject to the highest tax rate, along with aerated beverages such as Coca-Cola, Pepsi, and Fanta.

Large sport-utility vehicles and multipurpose vehicles exceeding 1,200 cc (petrol) or 1,500 cc (diesel) and measuring over 4 metres will now be taxed at 40%, up from the previous rate of 28% plus 22% cess.

Earlier, Union Finance Minister Nirmala Sitharaman announced that the overhaul aims to inject approximately Rs 2 lakh crore into the economy by increasing the disposable income of consumers.

IANS