The GST Council has approved the rate rationalisation with a focus on the common man, labour-intensive industries, farmers and agriculture, health, and key drivers of the economy. Briefing the media in New Delhi last night, Finance Minister Nirmala Sitharaman said that the Goods and Services Tax on common man and middle-class items has been reduced from 18 per cent or 12 per cent to 5 per cent. She informed that the GST Council approved exemption of GST on all individual life insurance policies, whether term life, ULIP or endowment policies, all individual health insurance policies, including family floater policies and policies for senior citizens and reinsurance thereof.
All these changes will come into effect from the 22nd of this month, the first day of Navratri. Ms Sitharaman said this move aims to make insurance affordable for the common man and increase insurance coverage in the country.n The Finance Minister further announced the reduction of GST from 12 per cent to NIL on 33 life-saving drugs and medicines, and from 5 per cent to NIL on three life-saving drugs used for the treatment of cancer, rare diseases, and other severe chronic conditions. GST on all other drugs and medicines has been reduced from 12 per cent to 5 per cent. The GST on various medical apparatus and devices used for medical, surgical, dental, or veterinary purposes, or for physical and chemical analysis, has also been reduced from 18 per cent to 5 per cent.
The Finance Minister informed that items such as hair oil, toilet soap, soap bars, shampoos, toothbrushes, toothpaste, bicycles, tableware, kitchenware, and other household articles will now have only 5 per cent GST. She further said that GST on ultra-high temperature milk, chena and paneer has been reduced to zero from 5 per cent, while all Indian breads will now see a nil rate. Ms. Sitharaman also announced that GST on food items such as namkeen, bhujia, sauces, pasta, instant noodles, chocolates, coffee, preserved meat, cornflakes, butter and ghee has been reduced from 12 per cent or 18 per cent to 5 per cent.
The Minister added that the GST slab on items like air-conditioning machines, televisions above 32 inches, all types of TVs, dishwashing machines, small cars and motorcycles has been lowered to 18 per cent from 28 per cent. Ms Sitharaman said that labour-intensive industries have given strong support, while farmers and the agriculture sector will also benefit from the decisions. She said the GST on all agricultural equipment has been reduced from 12 per cent to 5 per cent.
The Finance Minister further said that Prime Minister Narendra Modi set the tone for the next generation of tax reforms and ensured that people receive benefits at the earliest. She said that the government has corrected inverted duty structure issues, resolved classification-related matters, and ensured greater stability and predictability in the GST regime. Rationalising the indirect tax structure, the GST Council also cut the current four slabs down to two by scrapping the 12 per cent and 28 per cent rates, while retaining the 5 per cent and 18 per cent slabs. Revenue Secretary Arvind Shrivastava said the rationalisation of rates would entail a financial impact of 48,000 crore rupees, which would be “fiscally sustainable for the Centre and the state.
The 56th Meeting of the GST Council was held in New Delhi under the chairmanship of the Finance Minister. The Council deliberated on India’s next-generation GST reforms, including rationalisation of tax rates and simplification of compliance. Union Minister of State for Finance Pankaj Chaudhary, Chief Ministers of Delhi, Goa, Haryana, Jammu and Kashmir, Meghalaya and Odisha were present in the meeting. Deputy Chief Ministers of Arunachal Pradesh, Bihar, Madhya Pradesh, and Telangana, the Governor of Manipur and Finance Ministers of several States and Union Territories also participated in the meeting.
