New Delhi [India], September 3 (ANI): In a landmark move described as a Diwali gift to the nation, Finance Minister Nirmala Sitharaman on Wednesday announced sweeping “Next-Generation GST Reforms,” cutting tax rates across multiple sectors to ease the cost of living, boost economic growth, and provide relief to households, farmers, businesses, and the healthcare sector.
The 56th GST Council meeting decided to rationalise tax slabs by merging the 12 per cent and 28 per cent categories into just two—5 per cent and 18 per cent. The reforms cover essential items, automobiles, agriculture inputs, healthcare, insurance, education, and electronic appliances, along with process improvements to ensure faster refunds and simpler compliance.
Healthcare and Insurance Relief
In a historic step, individual health and life insurance policies have been fully exempted from GST, down from 18 per cent earlier, making them tax-free. Medical essentials such as thermometers, medical-grade oxygen, diagnostic kits, reagents, glucometers, test strips, and corrective spectacles will now attract only 5 per cent GST, providing relief to patients and healthcare providers alike.
Daily Essentials Made Cheaper
Household items such as hair oil, shampoo, toothpaste, toilet soap bars, toothbrushes, and shaving cream, earlier taxed at 18 per cent, will now fall under the 5 per cent bracket. Similarly, butter, ghee, cheese, dairy spreads, pre-packaged namkeens, bhujia, mixtures, utensils, feeding bottles, baby napkins, clinical diapers, and sewing machines have all moved to the lower 5 per cent slab.
Support for Farmers and Agriculture
Farmers will benefit from reduced input costs, with tractor tyres, tractor parts, and specified agricultural machinery for soil preparation, cultivation, harvesting, and threshing now taxed at 5 per cent instead of 12–18 per cent. Drip irrigation systems, sprinklers, bio-pesticides, and micronutrients have also been brought down to the 5 per cent slab.
Relief for Education Sector
To make learning more affordable, GST has been completely removed on maps, charts, globes, pencils, sharpeners, crayons, pastels, exercise books, notebooks, and erasers, shifting them into the nil tax bracket.
Automobile Sector Gains
Automobiles have seen significant relief, with petrol, LPG, and CNG hybrid cars (up to 1200 cc and 4000 mm) taxed at 18 per cent instead of 28 per cent. Diesel hybrid cars (up to 1500 cc and 4000 mm), three-wheelers, motorcycles up to 350 cc, and goods transport vehicles will also now fall under the 18 per cent slab.
Electronics and Appliances
High-demand appliances such as air conditioners, televisions above 32 inches, LED/LCD monitors, projectors, and dishwashers have been shifted from the 28 per cent slab to 18 per cent, bringing long-awaited relief to consumers.
Process Reforms
Alongside rate rationalisation, the government has introduced system-based process reforms, including automatic registration within three working days and faster refunds through risk-based evaluation.
PM Modi’s Statement
Prime Minister Narendra Modi hailed the wide-ranging reforms, calling them beneficial for every section of society. “Taxes for the general public will be reduced substantially. Our MSMEs and small entrepreneurs will get huge benefit. Everyday items will become cheaper, and this will give a boost to the economy,” he said. He added that the reforms would ease living for common citizens while strengthening the economy.
The revenue implication for the government is estimated at Rs 48,000 crore from these rate rationalisations.
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