GST overhaul: See what gets pricier

From essentials to vehicles, here’s how the new GST rates will impact you.

The Goods and Services Tax (GST) Council has approved a major change to India’s indirect tax system, the biggest since GST was first introduced in 2017.

The new structure reduces the number of tax slabs and lowers duties on many everyday items, such as medicines, household goods, small cars, and appliances. The aim is to encourage people to spend more within the country and help soften the economic impact of US tariffs on Indian products.

Earlier, GST had four tax slabs- 5, 12, 18, and 28 per cent. Now, the Council has decided to simplify this by keeping only two main slabs- 5 per cent and 18 per cent. However, a higher 40 per cent slab has been introduced for luxury and harmful products like expensive cars, tobacco, and cigarettes. The revised rates will apply from September 22, except for items like pan masala, gutkha, and unprocessed tobacco.

What will become costlier?

Soft drinks and beverages:

Popular aerated and caffeinated drinks such as Coca-Cola, Pepsi, and other non-alcoholic beverages will now be taxed at 40 per cent instead of the earlier 18 per cent or 28 per cent. Any drink with added sugar or flavouring will also fall under the 40 per cent tax bracket.

Vehicles:

Large vehicles with engines above 1,200 cc, motorcycles above 350 cc, and luxury items such as yatchs, private aircraft, and racing cars will attract a 40 per cent levy.

Tobacco products:

For now, tobacco will continue to be taxed at 25 per cent plus an additional cess until Covid-related state compensation loans are repaid. After that, it will be moved to the 40 per cent slab.

Leisure and gaming:

Activities such as horse racing, casinos, online gaming with money, and race club services will also face a 40 per cent GST.

This restructuring is expected to make essentials cheaper but increase the cost of luxury and harmful products.