New Delhi: Key changes proposed

The Goods and Services Tax (GST) Council, meeting on 3–4 September, is expected to roll out the biggest overhaul of the indirect tax regime since its introduction. The council is considering reducing the number of GST slabs from four to two—5% for essentials and 18% for most items—while creating a special 40% bracket for luxury and sin goods.

Nearly 400 items are likely to see tax cuts, while some categories will face higher rates. The move is aimed at boosting consumption ahead of the festive season but could cost the exchequer nearly $21 billion, with states likely to bear the larger share of the burden.

What may get cheaper

  • Daily-use goods: Paneer, butter, fruit juices, ice cream, toothpaste, khakra, and pizza bread could move from 12% to 5%.

  • Consumer durables and electronics: Televisions, refrigerators and air conditioners may see rates reduced from 28% to 18%, bringing down prices by around 7–8%.

  • Automobiles: Small cars, motorcycles and auto parts are expected to move to the lower slab.

  • Hospitality and entertainment: Hotel tariffs and cinema tickets could fall from 12% to 5%.

  • Healthcare: Cancer medicines, essential supplies and insurance services may be exempted from GST altogether.

  • Agriculture and renewable sectors: Fertilisers, synthetic yarns, handicrafts, solar cookers, stationery and textiles may see taxes reduced from 12% to 5%.

    • What may get costlier

    • Luxury vehicles and sin goods: Expensive cars, tobacco and pan masala may attract the new 40% slab.

  • Electric vehicles (EVs): Premium EVs priced between ₹20–40 lakh could see GST rise from 5% to 18%, while those above ₹40 lakh may face the 40% rate.

  • Coal and related products: Rates may increase from 5% to 18%, likely impacting power costs.

  • Apparel: Garments priced above ₹2,500 could move from 12% to 18%.