India has implemented a major revamp of its indirect tax system today with the launch of the ‘Next-Generation GST’ or GST Bachat Utsav. The government has said the reform has been aimed at simplifying the tax structure, boosting consumer spending, and adding over Rs 2 lakh crore to the economy.
The overhaul has lowered rates on a wide range of essential goods and services. UHT milk, paneer, and chena have been moved into lower tax brackets, while all Indian breads including chapati, roti, and paratha have been made tax-free. Popular packaged foods such as butter, biscuits, namkeen, jams, and juices have also become cheaper. More than 30 lifesaving drugs and therapies for critical illnesses, along with medical devices like diagnostic kits and glucometers, have been taxed at reduced rates. Stationery items including pencils, erasers, notebooks, and maps have similarly seen tax relief, easing costs for students.
Consumer durables have also seen relief. Household appliances like ACs, TVs, washing machines, and dishwashers have had their GST rates reduced from 28% to 18%. Cement for home construction has been brought under the same lower slab. Common services such as haircuts, salon visits, yoga, and gym memberships have also become more affordable.
To balance the revenue loss, the government has imposed a 40% GST rate on luxury and sin goods by merging cess with tax. Cigarettes, bidis, pan masala, and chewing tobacco have become significantly costlier. Aerated beverages such as Coca-Cola and Pepsi have been placed under the same higher slab. Online gaming and betting have also faced tax hikes.
High-end consumer categories have been affected too. Luxury cars, SUVs, MPVs, and motorcycles above 350cc have been moved to the 40% rate. Dining at premium air-conditioned restaurants has become more expensive, and premium smartphones along with imported gadgets have entered higher tax brackets.
The Finance Ministry has stated that the targeted approach has been intended to make daily essentials more affordable to households while shifting the burden to discretionary and luxury spending.
