According to sources who spoke to national media on Wednesday, the central government is actively considering a significant restructuring of the Goods and Services Tax (GST) rate slabs, which could be a huge relief for middle- and lower-income households. The proposal to lower the GST on a number of necessities that are currently subject to 12 per cent tax to 5 per cent or to do away with the 12 per cent tax slab entirely is at the centre of the debates.
According to people with knowledge of the situation, the bulk of the products that are currently falling under the 12% slab are common household items that are used by regular people, especially those from the middle class and other economically disadvantaged groups. For many Indian families, these goods make up a sizable portion of their daily expenses.
According to the sources, these products would be reclassified into the 5 per cent Goods and Services Tax category under the proposed plan, which would lower their retail prices and directly benefit customers. As an alternative, the government might think about doing away with the 12 per cent scale and moving the daily used goods into the 5 per cent or 18 per cent brackets, depending on the category.
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The upcoming 56th meeting of the GST Council, which is in charge of establishing GST policy, is anticipated to see a final decision on the issue. Although a 15-day notice is required for the Council meeting, sources indicate that the meeting may be held later this month.
Given that it occurs in a year before an election, this prospective rate cut is being seen as both an economic and a political strategic move. A significant portion of the population may experience less strain from cost of living as a result of the proposal, since inflation continues to impact the prices of necessities.
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The highest authority on tax-related issues, the GST Council, which is composed of finance ministers from each state and union territory and is led by the Union Finance Minister, is at the centre of any significant decision pertaining to the GST. To guarantee that both the federal government and the states have a voice, any modifications to tax rates must be approved by this body.
Should the suggested modifications be approved, the GST structure would undergo one of the most significant upheavals since it was initially implemented in 2017. More significantly, it might indicate a clear move towards a tax structure that is more consumer-friendly—one that is intended to reduce family burdens, increase daily spending, and provide much-needed relief from inflation on necessities.
List of items of everyday use which currently fall under the 12 per cent GST slab and may be shifted to the 5 per cent,18 per cent or 28 per cent slab:
Tooth powder
Sanitary napkins (originally taxed, now at 0 per cent, but related feminine hygiene items may still fall under 12 per cent)
Hair oil
Soaps (some categories, others are at 18 per cent)
Toothpaste (some branded variants at 12 per cent, others at 18 per cent)
Umbrellas
Sewing machines
Water filters and purifiers (non-electric types)
Pressure cookers
Cookware and utensils made of aluminium, steel (some are at 12 per cent)
Electric irons
Water heaters (geysers)
Vacuum cleaners (low-capacity, non-commercial)
Washing machines (small capacity)
Bicycles
Carriages for disabled persons
Public transport vehicles (when sold, not for fare)
Readymade garments (priced above Rs 1,000) Footwear priced between Rs 500 and Rs 1,000
Most vaccines
Diagnostic kits for HIV, Hepatitis, TB
Certain Ayurvedic and Unani medicines
Exercise books
Geometry boxes
Drawing and colouring books
Maps and globes
Glazed tiles (basic, non-luxury variants)
Ready-mix concrete
Pre-fabricated buildings
Agricultural equipment like mechanical threshers
Packaged foods such as condensed milk, frozen vegetables (some variants)
Solar water heaters
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