The next-generation GST reforms represent a significant step towards simplifying India’s indirect tax system. Now people can avail the benefit of GST reforms, which were already implemented on the 22nd of this month.
Under the new structure, the GST council has simplified the earlier four-tier structure of 5 per cent, 12 per cent, 18 per cent, and 28 per cent into a two-tier structure of 5 per cent and 18 per cent. By reducing the tax rate on a wide range of goods and services, the reforms are bringing substantial relief to citizens.
The Goods and Services Tax Council has approved major reforms in the indirect tax system. The earlier four-tier structure of 5, 12, 18, and 28 per cent has now been simplified into a two-tier framework of 5 and 18 per cent. An additional slab of 40 per cent has been introduced for select items such as tobacco and luxury goods.
The rate rationalisation aims to benefit the common man, labour-intensive industries, farmers, agriculture, healthcare, and other key drivers of the economy. Under the new structure, several essential food items, including ultra-high-temperature milk, chhena, paneer, pizza bread, and chapati, will attract zero tax.
In a significant relief for the agricultural sector, GST on equipment like tractors, harvesting machinery, and composting machines has been reduced from 12 to 5 per cent. Similarly, the GST on two-wheelers up to 350 cc has been lowered from 28 to 18 per cent, providing relief to lower-middle-class families, young professionals, and gig workers who rely on affordable transport. Talking to Akashvani News, Delhi resident Abhay Pratap welcomed the decision, saying it will go a long way in helping the middle class realise their aspirations.
The tax cut will provide a much-needed boost to the manufacturing sector, especially small and medium enterprises. Prime Minister Narendra Modi, on the 21st of this month, has also urged the citizens to buy swadeshi products, supporting domestic industries, small manufacturers, local artisans and MSMEs.