Has the GST Council Just Revolutionized the Tax Structure?
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Synopsis
In a groundbreaking decision, the GST Council has simplified the tax system by reducing the number of slabs and adjusting rates on various goods. This initiative, led by Finance Minister Nirmala Sitharaman, aims to make essential items more affordable while imposing higher taxes on luxury and harmful products.
Key Takeaways
- The GST Council has reduced tax slabs from four to two.
- 5% and 18% are the new GST rates.
- Personal care items see a tax decrease to 5%.
- Tobacco products face a significant tax increase.
- Reforms are designed to benefit all sections of society.
New Delhi, Sep 3 (NationPress) In a major development, the GST Council, under the leadership of Finance Minister Nirmala Sitharaman, has revamped the indirect tax framework by reducing the current four tax slabs to just two. The previous rates of 12 per cent and 28 per cent have been eliminated, while the 5 per cent and 18 per cent rates are retained.
This new GST structure will come into effect starting September 22.
The council has decreased the tax on personal care products such as hair oil, shampoo, toothpaste, and dental floss from 18 per cent to 5 per cent.
On the other hand, the tax on tobacco products, including cigars, cheroots, cigarillos, and cigarettes, has been raised significantly from 28 per cent to 40 per cent.
Additionally, the GST Council has lowered the tax rate on popular snacks like namkeens, bhujia, mixtures, chabena, and other ready-to-eat packaged foods from 12 per cent to 5 per cent, making them more accessible to consumers.
Conversely, the tax rate on all items containing added sugar, sweeteners, or flavors, including aerated drinks, will see an increase from 28 per cent to a steep 40 per cent.
Prime Minister Narendra Modi, in his Independence Day address, indicated that the Central government intends to implement significant reforms in GST, focusing on three pillars: structural reforms, rate rationalization, and improving the quality of life.
The areas earmarked for next-generation reforms include tax rate rationalizations aimed at benefiting all segments of society, particularly the common man, women, students, the middle class, and farmers.
These reforms are expected to minimize disputes related to classification, rectify inverted duty structures in specific sectors, ensure greater stability in rates, and enhance the overall ease of doing business.
According to PM Modi, these GST reforms will fortify key economic sectors, ignite economic activity, and facilitate sectoral growth.
Point of View
I believe that these reforms reflect the government's commitment to creating a fairer tax system that benefits every citizen. The emphasis on reducing the tax burden on essential goods while targeting harmful products is a balanced approach that aligns with national interests.
NationPress
03/09/2025
Frequently Asked Questions
What are the new GST tax rates?
The GST Council has finalized two tax rates: 5% and 18%, eliminating the previous rates of 12% and 28%.
When will these GST changes take effect?
The new GST rates will be implemented starting September 22.
Which items will see a tax reduction?
Personal care products like shampoo, toothpaste, and snacks will have their taxes reduced to 5%.
What items will face increased tax rates?
Tobacco products will see their tax rate increase from 28% to 40%.
What are the expected benefits of these reforms?
These reforms aim to simplify the tax structure, reduce disputes, and enhance the ease of doing business, ultimately benefiting the common citizen.
