GST Council meeting on Sept 3 and 4; cars, ACs, daily use items to become cheaper

The 56th meeting of the GST Council will be held on 3rd and 4th September in New Delhi to discuss the central government’s three-pillar GST reforms, which include a mega tax rate overhaul.

Apart from structural and ease of living-related reforms, the Council will take up the two-rate GST structure proposed by the Centre. It may be noted that the Centre’s proposal of 5% and 18% standard rate under GST has been approved by the GoM on rate rationalisation on Thursday.

The Central government has also proposed a 40% GST slab for sin goods.

It may be noted that Prime Minister Narendra Modi promised to lower the GST in his Independence Day speech and said mega benefits will come to the common citizens of the country by this Diwali.

The Union government has proposed a two-rate GST structure comprising a standard rate of 5% and 18%, thereby doing away with the 28% and 12% GST rates. The current GST slabs are 0%, 5%, 12%, 18% and 28%. A special slab of less than 5% will continue in the GST tax structure to promote employment-generating sectors, while a 40% slab has been proposed, comprising only five to seven sin goods. According to the proposals, 99% of items in the 12% slab will move to the 5% rate. Similarly, 90% of the items in the 28% slab will be moved to 18%.

It is expected that the prices of small cars will come down as the GST on small cars will be lowered to 18%.

Prices of common use goods such as namkeens, bhujia, snacks, noodles, butter, ghee, among others, will become cheaper once the proposal by the Ministry of Finance for a two-rate GST structure is approved by the GST Council.

“All essential daily use commodities related to food, education, consumed by the common man will come under nil or 5% GST slab,” said government sources.

“Positive impact is likely for foods—namkeens, bhujia mix, snacks, noodles, pasta, etc, popcorn, butter, ghee, cheese, dairy spreads, milk beverages, sauces, mayonnaise, condensed milk, roasted chicory/coffee substitute, coconut water, water in 20-litre pack,” said a Nomura report. Prices of ACs are also likely to come down with the reduction of GST by 10%.