New Delhi: New lower GST rates kicked in from Monday, resulting in a slashing of prices of as many as 375 items ranging from toothpaste and shampoo to cars and television sets, a move seen as an attempt to boost consumption to cushion an economy facing tariff headwinds.
Tax rates of 5, 12, 18, and 28 percent have been clubbed into two rates of 5 percent and 18 percent, resulting in a reduced price of 99 percent of daily use items.
FMCG, car companies, electronics manufacturers and pharma companies have lowered prices. As many as 375 items, including groceries, agri-equipment, clothing, medicines and automobiles, have become cheaper.
Finance Minister Nirmala Sitharaman visited the busy Laxmi Nagar market in the national capital and interacted with a stationery shop owner.
“The shopkeeper shared that Nex-Gen GST rate cuts on many stationery items have reduced prices, benefiting students and parents,” the Finance Minister’s Office said in a X post.
Prime Minister Narendra Modi has termed the reform as ‘GST Bachat Utsav’ and said that, along with the Income Tax exemption hike to Rs 12 lakh announced in the Budget, the total household savings would be Rs 2.5 lakh crore.
“Your household expenses will reduce and it will be easier to fulfil aspirations such as building a home, purchasing a vehicle, purchasing appliances, eating out or planning a family vacation,” the Prime Minister said in an open letter.
As per government estimates, there would be a saving of 13 percent in the household bills for groceries and daily essentials, while a small car buyer could save around Rs 70,000.
Stationery, clothing, footwear and medicines purchases would bring in savings in the range of 7-12 percent, while the savings would go up to 18 percent in the case of individual health and life insurance policies, which have been exempt from GST.
There would be a savings of Rs 40,000 on the purchase of tractors up to 1800 cc. GST rate has been cut to 5 percent on tractors from the earlier 12-18 percent.
In case of bikes/scooters (up to 350 cc) purchase, savings would be Rs 8,000, while in TV (above 32 inches), there would be savings of Rs 3,500. Air Conditioner purchase would result in a saving of Rs 2,800 as the GST rate of these items has been slashed from 28 percent to 18 percent.
Home Minister Amit Shah said that the Next-Gen GST reforms are a testament to Prime Minister Narendra Modi’s “steely resolve” to serve the poor, youth, farmers and women.
Meanwhile, opposition-ruled states slammed the Centre for taking all “undue credit” for the GST rate cut, saying it is the states who will have to suffer revenue loss.
West Bengal Chief Minister Mamata Banerjee on Monday accused the Centre of having passed the financial burden to states after lowering GST and taking “undue credit” for it.
“It was I who had asked for withdrawing the additional GST burden (on people), and the Centre should not take undue credit for it. The Centre won’t have to spend a single paisa. Every state will have to find ways to tide over the revenue loss,” Banerjee said.
Karnataka Chief Minister Siddaramaiah accused Modi of “deceiving” Indians.
“It was Modi who implemented GST, it was Modi who increased GST rates, and now it is Modi who is patting himself on the back. We were the ones who opposed when GST was increased to 18 per cent and 28 per cent. The very people who collected it all these years are now taking credit. See how cleverly they are deceiving Indians. You should not fall for this,” Siddaramaiah added.
Telangana Chief Minister A Revanth Reddy on Monday demanded that the Central government compensate for the loss of revenues due to the recent GST rate rationalisation for five years.
Congress general secretary Jairam Ramesh said the “limited” reform comes eight years too late, and a “big question mark” remains on whether the benefits of tax reduction will be passed on to consumers.
The cut in Goods and Services Tax (GST) rate is expected to boost demand, especially this festive season, and promote growth. The rate cut comes at a time when there is uncertainty in the export market created by the imposition of a 50 percent tariff by the US on Indian shipments.
