The Goods and Services Tax (GST) has never ceased to be a central component of the Indian taxation framework that affects business and consumers alike. Since the government has recently announced the new GST rates, effective from 22nd September, you must know how this change will affect your daily costs. Certain products have been made less expensive, and some have been made more expensive.
Understanding the Latest GST Changes
GST is an all-around indirect tax imposed on the sale of services and goods in India. In 2017, it substituted a complicated system of various indirect taxes, such as VAT, service tax, and excise duty and made the taxes easier to calculate and conduct business. Nevertheless, the GST rates are regularly adjusted to strike a balance between the growth of the economy, inflation, and the requirements of the government budget.
Some product categories were modified in the last revision, some shifted to lower slabs, and others to higher slabs. The idea was to cut down the tax on necessities and raise a small percentage on luxuries or non-necessities.
GST Rate Structure in India
The standard GST rates of ordinary taxpayers in India are 0% (nil-rated), 5, 12, 18, and 28 percent (common rates) on the majority of goods and services. Moreover, there are also the less popular rates of 3 per cent and 0.25 per cent. Under the composition scheme, businesses pay lower or nominal rates of GST, usually 1.5 per cent, 5 per cent or 6 per cent, depending on their turnover. In the GST system, there are also TDS (Tax Deducted at Source) and TCS (Tax Collected at Source), which are now imposed at 2% and 0.5%, respectively (previously at 1% until July 9, 2024). In addition, there is an extra charge placed on top of the usual GST rates on some products, including cigarettes, tobacco consumption, soft drinks, gasoline, and motor cars, and the rates, too, are highly diverse, ranging between 1 and 204. This tiered system keeps basic commodities at the lowest tax rate, with luxury and vice products levied at a higher rate, and the balance between how much people can afford and how much money it can collect.
Items That Are Now Cheaper
The cut of tax rates on common and everyday necessities, as well as the most popular goods, is one of the most notable events of the new GST revision. This will directly benefit the consumers and will lower the cost of living. Among the several well-known products that have fallen in price are:
- Food and Beverages: Some processed food products, such as packaged cereals, spices, and ready-to-eat snacks, are now under lower GST rates and therefore have become more affordable to households. Fresh fruits and vegetables that were not previously taxed still are not taxed.
- Healthcare and Medicines: A number of life-saving drugs and other medical consumable products must now be charged a lower GST slab. This will make it more affordable and accessible to the masses.
- Clothing and Apparel: GST rates have been reduced on clothing and footwear, primarily those that cost less than 1,000 rupees. This will probably help to get simple clothes closer to the reach of families with limited finances.
- Electric Vehicles (EVs) and Green Products: As part of the push towards sustainability by the government, the GST on some electric vehicles and green products has been lowered. This not only promotes the use of greener technologies but in the long-term decreases transportation expenses to consumers.
- Educational Materials: Books, notebooks, and certain stationery are now subjected to reduced taxation or are totally tax-free, which benefits students and schools.
Such cuts should bring instant relief to the average consumer and encourage them to use green and necessary products.
Items That Are Now More Expensive
Some of these have gone down in price, and others have experienced a rise in GST. These are usually luxury goods, non-essential goods or high-end goods. Consumers will pay a little more when buying the following:
- Luxury Cars and High-End Vehicles: GST levied on luxury vehicles has also been raised to keep the revenue intact and promote more environmentally efficient options. This change can hurt the buyers of luxury cars.
- Cigarettes and Alcohol-Based Products: In a bid to deter use and increase government income, GST has been increased on cigarettes, cigars and some types of alcohol. This shift is in line with health policy goals and taxation standards across the globe.
- Cosmetics and High-End Personal Care Products: There is an increase in the GST rate of some luxury beauty and personal care products. Basic toiletries are kept at a lower level, but higher-priced items increase in price.
- Electronics and Gadgets: Marginal GST increases have been registered in certain high-end electronic products, such as smartphones, laptops and luxury gadgets. This reform aims at discretionary expenditure but excludes basic electronics that people require every day.
- Imported Goods: The imported goods in India might be charged with extra GST or other charges associated with customs because of the new rates that might slightly raise the retail price of the goods.
List of Items with Changed GST Rates
| CATEGORY | ITEMS | FROM | TO |
| Food & Beverages | All forms of chapati, paratha, pizza bread, khakra, UHT milk, paneer, Indian breads | 5% | 0% |
| Packaged namkeens, bhujia, sauces, pasta, instant noodles, chocolates, coffee, preserved meat, cornflakes, butter, ghee | 18% | 5% | |
| Personal Care Products | Shampoo, talcum powder, toothpaste, toothbrushes, face powder, soap, hair oil | 18% | 5% |
| Household Items | Tooth powder, feeding bottles, tableware, kitchenware, umbrellas, utensils, bicycles, bamboo furniture, combs | 12% | 5% |
| Eyewear | Spectacles and goggles | 28% | 5% |
| Medical Devices | Thermometers, medical-grade oxygen, diagnostic kits, glucometers, test strips, corrective spectacles | 12%/18% | 5% |
| Medicines | 33 lifesaving drugs (12% → Nil); 3 cancer/rare disease medicines (5% → Nil); other drugs (12% → 5%) | 12%/5% | 0%/5% |
| Cement | Cement | 28% | 18% |
| Automobiles | Small cars and motorcycles ≤ 350cc | 28% | 18% |
| Insurance | Individual life and health insurance policies | 18% | 0% |
| Luxury & Sin Goods | Pan masala, tobacco, cigarettes, gutkha, sugary and caffeinated drinks, online gambling | 18%/28% | 40% |
Conclusion
The recent revision of the GST is a relief and a bit of an increment, which depicts a balanced taxation approach. Food, healthcare, clothing, education, and environmentally friendly products are cheaper now, whereas luxury, imported and high-end products are a little more expensive.
When consumers are informed about these changes, they have the power to make better decisions, more effectively plan their budgets, and reduce the effects of price changes on their lives. Companies, in turn, are able to revise their pricing and compliance strategies to align with the new rates and operate successfully within a dynamic economic environment.
As GST keeps changing, it is important that both households and businesses remain aware of any changes. Be it grocery shopping, books or even expensive gadgets, being aware of the new rates will enable you to not only spend smart but also save smart.
