This next-gen GST reform has immediately benefited goods of mass consumption and food items, which now will attract 5 per cent or 0 per cent GST instead of the higher earlier rates. Consumer durables like small cars, air conditioners, televisions, and cement have also been rationalised into the 18 per cent slab, reducing costs for households
Representational Image
The GST Council on Wednesday cleared sweeping changes to the indirect tax regime, approving an overhaul of rates by limiting slabs to 5 per cent and 18 per cent effective from September 22, the first day of Navratri. mid-day spoke to a few experts on what this means for the common man.
Diwali bumper
Viren Shah, president, Federation of Retail Traders Welfare Association (FRTWA)
“The Goods and Services Tax (GST) has been cut for close to 90 items. This is big news for our traders. I would term it a Diwali bumper bonanza. This time, Diwali is going to be good; we should see a shopping boost, especially for middle-class and lower-middle-class families. In some items, GST has been reduced; in others, it is practically nil. Several daily essentials have a nil GST rate, and GST will also no longer be applicable on exercise books, notebooks, stationery, school/college supplies, and children’s items. Cars, televisions will see a lesser GST. We also have clothes that are under Rs 2500 at 5 per cent GST. We have shoes attracting less GST. There may be some slight disappointment with apparel like bridal wear above Rs 2500, attracting 18 per cent GST. Yet, overall, the upsides have put a pre-Diwali sparkle into our lives.”
Good and Simple Tax
Arvind Bhansali, chairman, IMC Indirect Taxation Committee
“The IMC Chamber of Commerce and Industry wholeheartedly welcomes the Government of India’s recent decisions on rationalisation of GST rates and related measures. The IMC notes with appreciation the reduction of GST slabs from four (5 per cent, 12 per cent, 18 per cent, 28 per cent) to two simplified rates of 5 per cent and 18 per cent, with a special 40 per cent levy confined to luxury and sin goods.
This next-gen GST reform has immediately benefited goods of mass consumption and food items, which now will attract 5 per cent or 0 per cent GST instead of the higher earlier rates. Consumer durables like small cars, air conditioners, televisions, and cement have also been rationalised into the 18 per cent slab, reducing costs for households and businesses alike.
Equally significant is the exemption of individual life and health insurance policies from GST, which will encourage wider adoption of financial security products and benefit the middle class directly. We appreciate the quick sanctioning of export refunds and refunds from inverted duty structures, which is easing liquidity pressures and enabling businesses, especially MSMEs and exporters, to reinvest in growth and job creation.”
“These initiatives, coupled with the simplified two-slab system, mark a decisive step in making GST a truly Good and Simple Tax. These measures will significantly stimulate consumption, support domestic industry, reduce inflationary pressures, and reinforce India’s march towards becoming a Viksit Bharat.”
Stimulate domestic travel
Harshavardhan Neotia, chairman, Ambuja Neotia group
“The rationalisation of GST rate is a measure that carries wide implications across multiple sectors of the economy. For hospitality, the reduction of tax on hotel rooms priced up to R7500 per night, from 12 per cent with Input Tax Credit (ITC) to 5 per cent without ITC, will help make mid-market offerings more affordable and stimulate domestic travel, thereby strengthening the ecosystem of tourism and allied services.”
“In real estate, healthcare, and educational infrastructure, the lowering of GST on construction materials and other inputs provides welcome cost relief. This will ease the burden of development and operating expenses in areas that directly influence quality of life and community well-being.”
“While the absence of ITC in hospitality requires hotels to absorb upstream tax without set-offs, the path forward lies in a combination of thoughtful pricing, operational efficiency and cross-sector synergies. On balance, these reforms align affordability with fiscal discipline, offering the potential for both demand stimulation and sustainable growth.”
18 per cent
New GST slab on air conditioners and small cars
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