PM Modi's FIRST Comment As GST Council Approves Two-Tier Tax Structure: 'Reforms Will Improve Lives Of Our Citizens...'

(MENAFN- Live Mint) The GST Council on Wednesday (September 3) approved a landmark two-tier GST rate structure of 5% and 18% , following a marathon 10.5-hour session, marking a major step in India's next-generation tax reforms. The changes will come into effect from September 22.

Prime Minister Narendra Modi took to X, formerly Twitter, to announce the development, stating that the Union and State governments have collectively approved a range of reforms in the Goods and Services Tax (GST) , aimed at simplifying procedures and easing the financial burden on citizens and businesses.

In a post on X, formerly Twitter, PM Modi said:“During my Independence Day Speech, I had spoken about our intention to bring the Next-Generation reforms in GST. The Union Government had prepared a detailed proposal for broad-based GST rate rationalisation and process reforms, aimed at ease of living for the common man and strengthening the economy.”

He added that the reforms, cleared by the GST Council, will benefit multiple sections of society: "Glad to state that @GST_Council, comprising the Union and the States, has collectively agreed to the proposals submitted by the Union Government on GST rate cuts & reforms, which will benefit the common man, farmers, MSMEs, middle-class, women and youth."

Highlighting the expected impact, PM Modi said the changes would improve the ease of doing business:

"The wide ranging reforms will improve lives of our citizens and ensure ease of doing business for all, especially small traders and businesses."

All states on board

Bihar Deputy Chief Minister Samrat Choudhary confirmed that the reform was backed by all states, calling it a“consensus-based decision.”

Revenue implications

While supporting the move, some states flagged concerns over potential revenue losses. West Bengal Finance Minister Chandrima Bhattacharya noted that the total estimated loss from the rate rationalisation stood at ₹47,700 crore.

GST Council approves Mmajor tax overhaul; Rates slashed on daily use items, insurance policies exempted

In a landmark decision, the Goods and Services Tax (GST) Council on Wednesday approved sweeping reforms to India's indirect tax system, slashing rates on common-use items and collapsing the current four-slab structure into two primary slabs of 5% and 18%, effective September 22, the first day of Navratri.

Union Finance Minister Nirmala Sitharaman , briefing reporters after a marathon 10.5-hour meeting, said all decisions were taken unanimously, with no disagreement from any state.

Everyday items get cheaper

Personal-use items including hair oil, toothpaste, shampoo, soap, toothbrushes, talcum powder, face powder, and even TVs and consumer electronics will see their GST rates cut to 5% or 18% from the earlier 12–28% brackets.

Food and beverages such as butter, ghee, dry nuts, condensed milk, jam, confectionery, fruit juice, ice cream, pastries, biscuits, corn flakes, and cereals will now attract 5% GST instead of 18%. All forms of chapati and paratha will be exempted entirely.

Big relief for insurance, health coverage

In a significant move, all individual life and health insurance policies have been made tax-free, with the government aiming to expand coverage and ease financial strain on households.

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Cement rates slashed from 28% to 18%, making housing and infrastructure projects cheaper.

Cars under 1,200 cc (petrol) and 1,500 cc (diesel) will be taxed at 18%, down from 28%.

High-end cars, racing cars, yachts, aircraft for personal use, and motorcycles above 350 cc will face a 40% levy.

Motorcycles under 350 cc and consumer electronics like ACs, dishwashers, and TVs will drop to 18% from 28%.

EVs remain at 5% GST to continue promoting clean mobility.

Exceptions remain

Products such as tobacco, gutkha, and cigarettes will continue to attract 28% GST plus compensation cess, until loans taken to compensate states for earlier GST revenue losses are repaid.

Implementation from September 22

The newly approved two-tier GST structure will be implemented from September 22, marking a significant shift in India's indirect tax regime aimed at ease of living and ease of doing business.

Also Read | New GST Rates: 0% GST on Individual life insurance, health insurance

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