GST rate cuts from Monday to make food, medicines, cars and electronics cheaper

The Council, which brings together the Centre and states, has pruned GST rates across essential goods, aspirational products, medicines, automobiles, and even services.

Daily-use food items such as ghee, paneer, butter, namkeen, ketchup, jam, dry fruits, coffee, and ice cream will get cheaper. So will televisions, air conditioners, and washing machines. Several FMCG companies have already begun revising prices in anticipation of the lower tax burden.

For healthcare, GST on most drugs, formulations, and medical devices like glucometers and diagnostic kits has been brought down to 5 per cent, easing medicine costs for households. Pharmacies have been instructed to either revise the maximum retail price or sell medicines at reduced rates reflecting the tax cut.

Builders and homebuyers will benefit too, with cement now attracting 18 per cent GST, down from 28 per cent.

The automobile sector is set to gain the most. Buyers of small cars will pay 18 per cent GST, while bigger models will face 28 per cent, a steep cut from earlier slabs. Automakers have already rolled out price reductions.Services such as salons, beauty parlours, yoga studios, gyms, and health clubs will now be taxed at 5 per cent without input credit, compared with the earlier 18 per cent with credit.Household staples like hair oil, soaps, shampoos, toothbrushes, and toothpaste will also see lower tags, with tax rates trimmed to 5 per cent. Talcum powder, shaving creams, face powders, and aftershaves will follow the same trajectory.

The new structure simplifies GST into a largely two-rate system of 5 and 18 per cent. Ultra-luxury goods will attract 40 per cent, while tobacco and related products remain in the 28 per cent-plus-cess category.

Currently, GST operates in four slabs of 5, 12, 18, and 28 per cent, alongside a compensation cess on luxury and so-called sin goods.

Finance Minister Nirmala Sitharaman said last week that the overhaul “will infuse Rs 2 lakh crore into the economy, leaving people with more cash in hand that otherwise would have gone as taxes.”

Almost 99 per cent of goods under the 12 per cent slab will move to 5 per cent, while 90 per cent of items in the 28 per cent category will shift to 18 per cent.

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