New Delhi, September 3 (Kiran News): The GST Council on Wednesday approved wide-ranging reforms in the Goods and Services Tax (GST), lowering rates on several essential items such as soap, bicycles, televisions, and personal health and life insurance policies. No GST will now be charged on items like chhena, paneer, roti and paratha, while life-saving medicines will also be exempt from tax.
Union Finance Minister Nirmala Sitharaman, addressing a press conference after the 56th GST Council meeting, said that a two-tier tax structure of 5% and 18% has been approved. The new rates, excluding gutkha, tobacco products and cigarettes, will come into effect from September 22, the first day of Navratri.
She said GST on items such as hair oil, soaps, bicycles and other goods of daily and middle-class use has been reduced from 12% or 18% to 5%. Relief has also been provided by exempting GST on premiums for personal life and health insurance policies.
For automobiles, Sitharaman announced that small cars and two-wheelers up to 350cc will attract 18% GST, while three-wheelers will also be taxed at 18%. Tobacco, pan masala and cigarettes will continue to be taxed at a special rate of 40%. “This is not just a GST reform but a step towards structural reforms that will make people’s lives easier,” Sitharaman said.
Revenue Secretary Arvind Srivastava clarified changes in footwear taxation, stating that shoes priced below ₹2,500 will now attract 5% GST, while those priced above ₹2,500 will face 18% GST. Earlier, footwear under ₹1,000 was taxed at 12% and above ₹1,000 at 18%.
He added that small cars will be taxed at 18%, while all other cars will attract 40% GST. The definition of small cars remains the same, covering petrol engines up to 1200cc, diesel engines up to 1500cc, along with length restrictions.
Prime Minister Narendra Modi welcomed the Council’s decision, calling it a step that will improve the lives of citizens and make business easier, particularly for small traders and enterprises. In a post on ‘X’, he said the government has prepared a comprehensive proposal to rationalise GST rates and simplify processes, with the goal of making life easier for the common man and strengthening the economy.
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