What Does the Reduction in GST Rates Mean for Varanasi?

Varanasi, Sep 4 (NationPress) A newfound sense of elation has enveloped Prime Minister Narendra Modi's parliamentary area, Varanasi, following a notable decrease in GST rates. On Thursday, both business owners and everyday citizens conveyed their relief and appreciation, hailing it as a commendable decision that alleviates financial burdens and stimulates commerce.

Local merchants are optimistic that the GST reduction will not only aid consumers but also rejuvenate regional markets. Many have commended the government for responding to international tariff challenges, especially those enforced by the United States.

IANS reached out to a Chartered Accountant (CA), a trader, and a community member to gather their insights on the announcement.

Kaushal Pandey, a chartered accountant, remarked, “This is a significant transformation. The government has established two tax tiers, making products more accessible for everyone. It was anticipated that the government would react to US tariffs, and they have. Citizens can now purchase essentials at more affordable rates.”

Trader Sunil Upadhyay resonated with this perspective, stating, “This will undoubtedly benefit the lower and middle classes. The GST on packaged goods has been reduced to 5 percent, which is excellent.”

Tulsi Kamalkant Joshi, a local inhabitant, added, “Prices have nearly halved. This brings immense relief to ordinary citizens. The lower and middle-income demographics will clearly gain from this.”

Meanwhile, as the GST Council sanctioned groundbreaking modifications to India's indirect tax framework, numerous everyday items will see price reductions starting September 22.

The recently adopted tax structure features two principal slabs: 5 percent and 18 percent, alongside a steep 40 percent for luxury goods.

For the average person, this shift translates to increased disposable income, which the government anticipates will circulate back into the economy, providing a significant uplift.

A diverse array of products and services, including groceries, fertilizers, footwear, textiles, and even renewable energy, are poised to become more economical. Items previously subjected to 12 percent and 28 percent tax rates will largely transition to the other two slabs, making a wide assortment of products less expensive.

Food and daily essentials:

Milk products: Ultra-high temperature (UHT) milk will now be tax-exempt (previously 5 percent), while condensed milk, butter, ghee, cottage cheese, and cheese have shifted from 12 percent to 5 percent or zero in certain instances.

Staple foods: Malt, starches, pasta, cornflakes, biscuits, and even chocolates and cocoa products will experience rate reductions from 12–18 percent to 5 percent.

Dry fruits and nuts: Almonds, pistachios, hazelnuts, cashews, and dates, previously taxed at 12 percent, will now incur only 5 percent tax.

Sugar and confectionery: Refined sugar, sugar syrups, and confectionery items like toffees and candy have transitioned to the 5 percent slab.

Other packaged foods: Vegetable oils, animal fats, edible spreads, sausages, meat preparations, fish products, and malt extract-based packaged foods have been moved to the 5 percent slab.

Namkeens: Bhujia, mixtures, chabena, and similar ready-to-eat edible preparations (excluding roasted gram), pre-packaged and labeled, will drop from 18 percent to 5 percent.

Water: Natural or artificial mineral waters and aerated waters, free from added sugar or sweeteners, will decline from 18 percent to 5 percent.

Agriculture: Fertilizers are reduced from 12 percent/18 percent to 5 percent.

Select agricultural inputs, including seeds and crop nutrients, have been adjusted from 12 percent to 5 percent.

Healthcare: Life-saving medications, health-related products, and certain medical devices have observed rate reductions from 12 percent/18 percent to 5 percent or none.

Individual life and health insurance policies, including family floaters, which previously had a 12 percent tax, will now be tax-free.

A significant portion of medical items regularly used—such as thermometers and glucometers—will be categorized under the 5 percent tax bracket.

Consumer goods: Entry-level and mass-market items like select electrical appliances will move from 28 percent to 18 percent.

Footwear and textiles have experienced GST reductions from 12 percent to 5 percent, making mass-market products more affordable.

Nonetheless, some goods and services remain firmly subject to elevated taxation.

Items like pan masala, gutkha, cigarettes, chewing tobacco, zarda, unmanufactured tobacco, and bidi will maintain current high GST rates and compensation cess until outstanding cess-linked loans are settled.

Moreover, the valuation of these products will now switch to Retail Sale Price (RSP) instead of transaction value, enhancing compliance.

All goods (including aerated waters) containing added sugar or sweeteners will shift from 28 percent to 40 percent.

A new 40 percent slab for luxury and sin goods persists, ensuring that products like cigarettes, premium liquor, and high-end vehicles do not receive tax relief.

Imported armored luxury sedans will only be exempt in specific circumstances, such as those imported by the President’s Secretariat.