Will Household Food Expenses Drop Significantly After Tax Cuts on Staples?
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Synopsis
With the festive season upon us, the GST Council has made a significant announcement regarding tax cuts on essential food items and packaged goods. This move is expected to bring down household food expenses and provide relief to families across the nation. Discover how these changes will impact your grocery bills.
Key Takeaways
- GST on several food items reduced to zero.
- Key dairy products now taxed at 5%.
- Inflation rates have dropped significantly.
- Families expected to see relief in grocery bills.
- Strong rural demand boosts consumption sector.
New Delhi, Sep 4 (NationPress) As the festive season approaches, the GST Council, under the leadership of Union Finance Minister Nirmala Sitharaman, has unveiled a substantial reduction or complete tax exemption on various food items, packaged goods, and daily necessities.
UHT milk, paneer, pizza bread, rotis, and khakhras will now enjoy a zero tax rate following GST 2.0, down from 5 percent. Parathas and parottas, which were previously taxed at 18 percent, have also moved to the nil tax bracket.
The GST on essential dairy products such as butter, ghee, and cheese has been reduced from 12 percent to 5 percent. Prices for condensed milk and a variety of packaged foods like jams, sauces, pickles, and fruit juices are set to decrease.
Dry fruits and nuts, including almonds, cashews, pistachios, and dates, will now be taxed at 5 percent instead of 12 percent. Additionally, biscuits, cakes, chocolates, cornflakes, soups, and ice cream will see a tax cut from 18 percent to 5 percent.
This announcement comes as inflation shows signs of easing, with headline retail inflation falling to 1.55 percent in July, the lowest since June 2017. Food inflation has also dipped into negative figures (–1.76 percent), the lowest since January 2019.
Families are anticipated to gain relief after experiencing fluctuating household expenses earlier this year due to volatile vegetable prices. Packaged food manufacturers are expected to swiftly pass on these benefits. Executives have stated that the grammage in Rs 5 and Rs 10 packs, which had been reduced in recent years due to rising input costs, will be reinstated.
Analysts foresee that snack manufacturers will greatly benefit, as the GST on these products is projected to drop from 12 percent to 5 percent.
The GST Council's decision is likely to stimulate the consumption sector, which experienced a 7 percent growth in the June quarter, driven by robust rural demand.
Point of View
It is imperative to recognize the significance of the GST Council's decision to reduce taxes on staple foods and essentials. This strategic move not only alleviates the financial burden on families but also promotes consumer spending, which is vital for economic recovery. It reflects a proactive approach to addressing inflation and supports the welfare of the populace.
NationPress
04/09/2025
Frequently Asked Questions
What food items are affected by the new GST tax cuts?
The new GST tax cuts affect a variety of food items including UHT milk, paneer, pizza bread, rotis, khakhras, parathas, and dairy products like butter and ghee, among others.
How will these tax cuts impact food prices?
These tax cuts are expected to lower food prices significantly, making essential goods more affordable for families across the nation.
When will the new GST rates come into effect?
The new GST rates are effective immediately following the announcement, allowing consumers to benefit from reduced prices right away.
Who will benefit from these tax reductions?
Families and consumers will benefit directly from lower food prices, while food manufacturers are expected to see increased sales due to enhanced consumption.
Is this move expected to affect inflation?
Yes, this move is anticipated to further stabilize inflation rates as consumer spending increases and costs decrease for essential goods.
