New Delhi: The GST Council has announced a major overhaul of the Goods and Services Tax (GST) system, which will come into effect from Monday (September 22).
The new structure aims to simplify the tax regime and provide relief to consumers by reducing rates on essential items while increasing levies on luxury goods.
In its 56th meeting chaired by Finance Minister Nirmala Sitharaman, the GST Council decided to reduce the existing four tax slabs to just two — 5% and 18%. The earlier 12% and 28% slabs have been removed.
According to the Finance Minister, “Essential items for the common man will now attract only 5% GST instead of 12% or 18%”. Items such as bread, paneer, ultra-high temperature milk, and 33 life-saving medicines will now be tax-free.
Processed foods like pasta, noodles, biscuits, and cakes, which earlier attracted 12% GST, will now be taxed at 5%. Similarly, packaged beverages including coconut water, soy milk drinks, and fruit-based juices will also see a reduction in GST from 12% to 5%.
Luxury goods such as air conditioners, washing machines, and televisions larger than 38 inches will now fall under the 18% slab, down from the previous 28%. However, high-end motorcycles (above 350cc), tobacco products, and flavored pan masala will be taxed under a special slab, making them costlier.
In the healthcare sector, the government has announced that 33 generic medicines and three life-saving drugs used for treating cancer and rare diseases will be exempt from GST. Additionally, medical devices like bandages, dressings, and dental items will now attract 5% GST, reduced from 12%.
The National Pharmaceutical Pricing Authority (NPPA) has directed companies to revise the Maximum Retail Price (MRP) of medicines and medical devices in line with the new GST rates. Companies have been asked to issue updated price lists to dealers and retailers, ensuring compliance without needing to relabel existing stock.
The revised GST structure is expected to make daily-use items more affordable for consumers while streamlining the tax system for businesses. With the new rates effective from September 22, both households and industries will need to adjust to the updated pricing and compliance norms.
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