GST 2.0 will bring down grocery bills by 13%, Rs 70,000 savings on small car purchases

New Delhi: The GST next-gen reforms, which kicked in from Monday, will lead to a saving of 13 per cent in the household bills for groceries and daily essentials, while a small car buyer could save around Rs 70,000.

According to government estimates, stationery, clothing, footwear and medicines purchases would bring in savings in the range of 7-12 per cent, while the savings would go up to 18 per cent in the case of individual health and life insurance policies, which have been exempt from GST effective Monday.

As many as 375 items, including groceries, agri-equipments, clothing, medicines and automobiles, got cheaper as the GST 'next-Gen' reform kicked in from Monday. Prime Minister Narendra Modi has termed the reform as 'GST Bachat Utsav'.

The government has estimated that 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 per cent on tractors from the earlier 12-18 per cent.

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 per cent to 18 per cent.

Modi, in his address to the nation on Sunday, had said "GST Bachat Utsav (savings festival)", coupled with the hike in income tax exemption to Rs 12 lakh given in the Budget, will be a "double bonanza" for people.

Modi said the cut in GST rates and the hike in I-T exemption limit will help households save Rs 2.5 lakh crore annually.

"Now, the poor, the neo-middle class, and the middle class are receiving a double bonanza. With the reduction in GST, it will be easier for them to fulfil their dreams," Modi said.

Effective Monday, GST has become a two-tier structure wherein the majority of goods and services will attract tax of 5 per cent and 18 per cent. A 40 per cent tax will be levied on ultra-luxury items, while tobacco and related products will continue to be in the 28 per cent plus cess category.

Since its launch on July 1, 2017, Goods and Services Tax (GST) has been a 4 slab structure of 5 per cent, 12 per cent, 18 per cent and 28 per cent. Besides, a compensation cess was levied on luxury items and demerit or sin goods.

About 99 per cent of goods under the 12 per cent GST slab currently will move to 5 per cent. The rejig will also result in 90 per cent of items under the 28 per cent tax slab coming down to the 18 per cent bracket.