The Goods and Services Tax (GST) next-gen reforms, which kicked in from Monday, September 22, will lead to a savings of 13% in 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%, while the savings would go up to 18% in the case of individual health and life insurance policies, which have been exempt from GST.
As many as 375 items, including groceries, agri equipment, clothing, medicines, and automobiles, got cheaper as the new GST reform kicked in. Prime Minister Narendra Modi has termed the reform as ‘GST Bachat Utsav’.
The government has estimated 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% on tractors from the earlier 12-18%.
In case of bikes and scooters (up to 350 cc) purchases, savings would be Rs 8,000, while on TVs (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% to 18%.
PM Modi, in his address to the nation on Sunday, had said the “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 IT 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.
GST has become a two-tier structure, wherein the majority of goods and services will attract tax of 5% and 18%.
A 40% tax will be levied on ultra-luxury items, while tobacco and related products will continue to be in the 28% plus cess category.
Since its launch on July 1, 2017, GST has been a four-slab structure of 5%, 12%, 18% and 28%. Besides, a compensation cess was levied on luxury items and demerit or sin goods.
About 99% of goods under the 12% GST slab currently will move to 5%. The rejig will also result in 90% of items under the 28% tax slab coming down to the 18% bracket.
Edited by Suman Singh
