New GST regime may bring prices of essential goods down

STC NEWS MONITORING DESK
NEW DELHI, AUGUST 18 (STC): The overhaul in Goods and Services Tax (GST) announced by the Prime Minister Narendra Modi in his Independence Day speech last week is going to bring down prices of essential goods. This “ next generation” reform is simplifying the tax structure and reducing the number of tax slabs.
As part of the changes, taxes on passenger vehicles and two-wheelers are also expected to be lowered. Reports appearing in cross section of media state that a two-tier system with 5% and 18% brackets has been proposed, with items currently under the 12% and 28% slabs likely to be reclassified into these categories.
Specifically, according to sources the government plans to cut tax on 90 per cent of all goods currently attracting 28 per cent GST and drop these products into the 18 per cent bracket. A similarly large chunk of goods now taxed at 12 per cent will face reduced levies – five per cent only.
The five per cent bracket will include ‘daily-use’ items, the government had said.
In addition, there will be a special ‘sin tax’ of 40 per cent on certain items, including tobacco products. There will be only five to seven goods in this list, sources said.
According to the experts, daily-use items like toothpaste, umbrellas, pressure cookers, sewing machines, small washing machines, and bicycles could see price cuts. Readymade garments over ₹1,000, footwear between ₹500–₹1,000, vaccines, ceramic tiles, agricultural tools, mobile phones, computers, processed foods, hair oil, and school stationery may also be included.
Meanwhile, items like televisions, refrigerators, air-conditioners, washing machines, aerated drinks, and construction goods (cement, ready-mix concrete) are likely to fall under the new 18% GST slab, said experts.
They added that passenger vehicles, currently taxed at 28% plus cess, may shift to the 18% bracket—potentially cutting car and bike prices by 10%. Electric vehicles will continue at 5%.

(Straight Talk Communications)