The GST Council on Wednesday gave an early Diwali cheer to the common man after it slashed the tax rates of several essential items in a move aimed at spurring consumption in the economy.
In a late evening media briefing, finance minister Nirmala Sitharaman said the GST reforms are specifically designed to benefit the common man by drastically lowering rates on daily-use items and simplifying the tax structure.
READ ALSO: GST rate cuts to boost urban consumption, give formal sector a leg-up
GST relief for FMCG items
According to a notification by the government, the rate reduction applies to items across food processing, confectionery and household-use categories.
Packaged water, confectionery, chocolates, coffee, cocoa, malt foods (Horlicks for eg), coffee/tea extracts will see a sharp reduction in rates among the food items.
In the personal care categories, soap bars, toothpaste, toothbrushes, shaving cream, shampoo and hair oil will see a similar reduction.
Each of these items will attract only 5% GST, compared to the earlier 18% slab — marking a sharp 13 percentage point reduction.
Some other essential items will see a 7 percentage point cut to 5% (from earlier 12%). These include butter, condensed milk, cheese, nuts and dry fruits, marine products, sugar, extruded bakery products, a number processed foods (such as tomato puree), sauces/dressings, jams, Indian snacks (namkeen/bhujia), fruit juices and flavoured milk.
Under the next-generation reforms, GST will be moved to a two-slab system of 5% and 18% (with a special 40% slab for luxury goods), effective September 22, 2025. The existing 12% and 28% slabs will be phased out.
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