The 56th meeting of the GST Council, led by Finance Minister Nirmala Sitharaman, is being held today with high expectations.
Traders and businesses are hoping for major reforms, including rate cuts and a simpler tax structure, just ahead of the festive season.
What’s Expected?
Prime Minister Narendra Modi had earlier hinted at a “Diwali gift” in the form of GST reforms.
The Council is expected to discuss a shift from the current four-slab structure (5%, 12%, 18%, 28%) to a simplified two-slab system.
The new system may also include a “sin tax” of 40% on a limited list of luxury and harmful products such as tobacco and luxury cars.
Possible Rate Reductions
Under the proposed changes:
28% items may shift to 18%
18% items could drop to 12% or 5%
Certain goods may even become exempt from GST
What May Get Cheaper
1. Automobiles
Small cars (under 1200cc), bikes (under 350cc), and auto parts may see GST drop from 28% to 18%.
2. Hospitality & Entertainment
Hotel stays and movie tickets may come down from 12% to 5%.
3. Healthcare
Cancer drugs may be exempted.
Other essential medicines and supplies may drop from 12% to 5%.
Health and life insurance may also be exempted.
4. Daily Essentials
Items like paneer, khakra, pizza bread, butter, cheese, coconut water, fruit juices, pasta, and ice cream could move from 12% to 5% or even become GST-free.
5. Agriculture & Fertilisers
Inputs like sulphuric acid, nitric acid, and ammonia may reduce from 18% to 5%.
6. Textiles
Products like synthetic yarn, staple fibre yarns, carpets, and handicrafts may shift from 12% to 5%.
7. Green Energy
Solar cookers may see GST drop from 12% to 5%.
8. Stationery
Erasers could be exempted.
Notebooks, maps, atlases, charts may fall from 12% to 5%.
9. Toiletries
Toothpowder: 12% → 5%
Toothpaste: 18% → 12%
Shampoo, soap, oil: 18% → 5%
10. Others
Umbrellas: Likely to be taxed at 5%.
Hotel rooms (under ₹7,500/night): 12% → 5%
What May Become Costlier
1. Sin and Luxury Goods
Tobacco, pan masala, and luxury cars may be taxed at a special 40% sin tax.
2. Electric Vehicles (EVs)
Mid-range EVs (₹20–40 lakh): GST may go from 5% to 18%.
Luxury EVs (above ₹40 lakh): May face 40% GST.
3. Coal & Energy
Coal may move from 5% to 18% after removing cess, potentially increasing electricity costs.
4. Apparel
Clothing above ₹2,500 per piece may jump from 12% to 18%.
Impact on the Economy
Experts believe the rate cuts could:
Boost consumer spending, especially by middle-class families
Encourage private investments
Stimulate market activity
However, the government may face a revenue loss of around ₹50,000 crore due to these changes.
