GST Cuts this Festive Season: From Medicines to Luxury Goods, Here’s What Gets Cheaper & What's Costlier

The new and revamped Goods and Services Tax (GST) rates has kicked in from today, September 22, with the new rates now slashing prices of many essential items. On Sunday, Prime Minister Narendra Modi addressed the nation, while welcoming the “next generation reforms” and congratulating the citizens on what he referred to as the “GST Savings Festival”. 

Bringing a huge reshuffle of tax rates across goods and services, the new GST regime introduces two primary tax rates of 5% and 18%. As per this new framework, ultra-luxury and sin goods will be taxed at 40%.

The new rates come soon after the 56^th GST Council meeting chaired by Union Finance Minister Nirmala Sitharaman.

What Gets Cheaper?

Milk and Bread: Several daily essentials like milk, pre-packaged paneer and chena will see a dip in prices. On the other hand, all Indian breads (chapati, roti, paratha, parotta, khakhra, pizza bread) will also see a drop. In addition to that, butter, biscuits, namkeen, jams, ketchup, juices, dry fruits, ghee, ice cream, pastry and sausages are also getting cheaper.

Medicines: In another crucial move, there comes a relief for many lifesaving medicines namely 33 drugs and therapies, including those for cancer and rare diseases (Agalsidase Beta, Imiglucerase, Eptacog alfa, Daratumumab, Onasemnogene abeparvovec, Risdiplam, among others) Earlier, many medicines that were taxed at 12 percent will now attract zero GST. Apart from that, GST rates on medical devices such as diagnostic kits and glucometers have been slashed down to 5 percent.

Stationery goods: The new framework has also reduced prices of school and office stationery items like erasers, pencils, sharpeners, crayons, chalk and charcoals. Besides that, notebooks, maps, graph books, etc. also gets cheaper.

Many other consumer items like soaps, shampoos, hair oil, face creams, shaving cream will see reduced prices. Additionally, GST rates for kitchen appliances and electronics like ACs, TVs, washing machines, dishwashers have been moved to 18 percent from 28 percent. The dame reducing has been witnessed in the segment of cement for housing (down from 28 percent to 18 percent).

In terms of the service sector, haircuts, salon services, yoga centres, gyms and health clubs will now attract lower GST rates.

What Gets Expensive?

In case of the sin goods like cigarettes, bidis, pan masala, tobacco and reconstituted tobacco products, there will be a 40% GST. The same will apply for online gaming and betting.

An impact will also be visible on luxury vehicles. SUVs/MPVs above 1,200 cc (petrol) or 1,500 cc (diesel) and longer than 4m that was earlier taxed at 28 percent plus 22 per cent cess will now be taxed at 40 percent. The net impact will be slightly lower, but still in top bracket.

In addition to that, motorcycles above 350 cc that earlier saw 28 percent GST + 3 percent cess, will now be charged a 40% GST.

Many aerated beverages like Coca-Cola, Pepsi, Mountain Dew, Fanta and other carbonated drinks will now be taxed at 40 percent (earlier 28 percent).

Items taxed at 18 percent

Restaurant dining at AC or premium outlets, premium smartphones and imported gadgets, consumer durables like fridges, washing machines, air-conditioners have been moved down from 28 percent to 18 percent GST.

The same is applicable for beauty and grooming services at premium salons and spas.