GST Overhaul Slashes Rates: 90% of Goods to Get Cheaper from September 22

In a landmark move, the GST Council has approved a sweeping reform of India’s indirect tax regime, reducing the existing four-tier structure to just two primary slabs—5% and 18%—with a special 40% rate for luxury and sin goods.

The overhaul, effective September 22, is expected to make over 90% of goods cheaper, including household essentials, medicines, small cars, and appliances.

Union Finance Minister Nirmala Sitharaman hailed the reform as a “complete reduction for the common man and middle class,” emphasising its dual focus on rate rationalisation and structural simplification.

• Insurance Relief: Individual life and health insurance policies are now GST-exempt.
• Agriculture Boost: Farming equipment and inputs see significant rate cuts.
• Job Creation Push: Labour-intensive sectors like textiles and footwear receive targeted relief.
• Luxury & Sin Goods Taxed Heavily: Cigarettes, luxury cars, and carbonated drinks will attract a steep 40% GST.
• State Consensus Achieved: Despite concerns over revenue losses, all states backed the reform after compensation discussions.
• Administrative Ease: GST Appellate Tribunal to be operational by December; compliance processes simplified.

Industry leaders have welcomed the move, with many pledging to pass on benefits to consumers ahead of the festive season. Experts estimate a Rs 48,000 crore impact on the exchequer, but anticipate a surge in domestic demand.