In a major move to simplify India’s indirect tax structure, the government is considering sweeping reforms to the Goods and Services Tax (GST). The proposal includes a two-slab structure and the introduction of a 40% rate, a step signalled by Prime Minister Narendra Modi in his Independence Day address.
A comprehensive report on rate rationalisation, already reviewed by the Group of Ministers, will be tabled at the 55th GST Council meeting on September 3 and 4. The Council will take the final call after deliberations.
What will become expensive?
Items moving to 18% GST (from 12%)
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Man-made menthol
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Petroleum operations under exploration licenses or mining leases
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Coal bed methane operations
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Readymade garments priced above Rs 2,500
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Footwear priced above Rs 2,500
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Chemical wood pulp, uncoated paper and paperboards
Items moving to 40% GST (from 28%)
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Revolvers, pistols
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Smoking pipes
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Cigar or cigarette holders
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Station wagons, racing cars
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Motor vehicles above 1200cc and longer than 4000mm
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Aircraft, helicopters, aeroplanes for personal use
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Yachts and other vessels
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Motorcycles above 350cc
If approved, the hike will directly impact several consumer goods and luxury items, making them significantly costlier in the coming months.
Disclaimer: These proposals are yet to be finalised. The GST Council will deliberate and make the final decision in its upcoming meeting on September 3 and 4.
