After the GST Council approved a new, simplified two-slab structure of 5% and 18%, along with a 40% rate on sin goods, effective from September 22 and replacing the previous four-tier system of 5%, 12%, 18%, and 28%, the Cabinet Secretary has called a meeting for tomorrow to address concerns raised by individual sectors, The Indian Express reported citing senior government officials. 

Auto sector

The outlet reported that the auto sector has been facing issues ever since the new GST rates were out. The GST on small vehicles and three-wheelers have been reduced to 18% and mid-size and large cars will attract 40% GST. However, they would actually be cheaper, because the government has removed the cess on large cars, with which the actual value is somewhere between 45 and 50 per cent. 

Since the rates would be applicable from September 22, the people are finding it difficult to adjust the cess on vehicles which have reached dealerships but would likely be sold after the new GST rates come into effect. 

  • Small cars, two-wheelers ≤350cc: 28% → 18%
  • Buses, trucks, three-wheelers, all auto parts: 28% → 18%
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Bicycles, tractors and fertilisers industry

The representatives of the bicycles, tractors and fertilisers industry have also flagged concerns over the new GST reforms to the government. In the latest GST reforms, the government has rolled out an inverted duty structure. For context, the GST on materials is higher than the finished goods. 

  • Tractors: 12% → 5%; tires and parts: 18% → 5%
  • Bio-pesticides and natural menthol: 12% → 5%
  • Bicycles: 5%; raw materials (steel and plastic): 18%

The outlet also reported that the meeting would also focus on ways to ensure that each sector passes on the benefits to the customers. 

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GST reforms are built on seven pillars, the government said. These are: one-nation, one tax, simpler GST system, smoother duty structures, faster processing of refunds, putting consumers first as essential goods are within 0-5% bracket, and GST on high-value items have been reduced. 

The latest GST rates would also empower MSMEs and manufacturers as they have inverted duty structures. It would also make the states stronger with sustainable revenue growth and have simple rates to support the government’s Make in India initiative. 

Small and low-risk businesses can easily register, and the council has pushed for 90% provisional refunds for exporters. 

GST 2.0 also means that lower taxes, which in turn would encourage people to buy more. As this happens, the demand will rise and industries will grow. 

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New GST rates

Food and household

  • Products like Ultra-High Temperature (UHT) milk, Pre-packaged and labelled chena or paneer, and all the Indian Breads will see NIL rates
  • Household goods like soaps, shampoos, toothbrushes, toothpaste, tableware, bicycles now at 5%.
  • Food items such as packaged namkeens, Bhujia, Sauces, Pasta, Chocolates, Coffee, Preserved Meat etc., reduced from 12% OR 18% to 5%
  • Consumer durables: TVs (LCD/LED) (> 32’), ACs, dishwashers: 28% → 18%.

Home building materials

  • Cement: 28% → 18%.
  • Marble/travertine blocks, Granite blocks, Sand-lime bricks: 12% → 5%
  • Bamboo flooring/joinery, Packing cases & pallets (wood): 12% → 5%

Automobile

  • Small cars, two-wheelers ≤350cc: 28% → 18%.
  • Buses, trucks, three-wheelers, all auto parts: 28% → 18%.

Agriculture

  • Tractors: 12% → 5%; tires and parts: 18% → 5%.
  • Harvesters, threshers, sprinklers, drip irrigation, poultry & bee-keeping machines: 12% → 5%.
  • Bio-pesticides and natural menthol: 12% → 5%.

Education

  • Books, erasers, pencils, crayons, sharpeners: 0%
  • Geometry boxes, school cartons, trays: 12% → 5%.

Medical

  • 33 life-saving drugs, diagnostic kits: 12% → 0%.
  • Other medicines, including Ayurveda, Unani, Homoeopathy: 12% → 5%.
  • Spectacles and corrective goggles: 28% → 5%.
  • Medical oxygen, thermometers, surgical instruments: 12–18% → 5%.
  • Medical, dental, and veterinary devices cut from 18% to 5%.

Services

  • Hotel stays up to ₹7,500/day from 12% to 5%.
  • Gyms, salons, barbers, and yoga GST cut from 18% to 5%.

Health

  • GST exemption on premiums for individual life insurance, health insurance, floater plans, and senior citizen policies.

Toys, sports and handicrafts 

  • Handicraft idols & statues: 12% → 5%.
  • Paintings, sculptures: 12% → 5%.
  • Wooden/metal/textile dolls & toys: 12% → 5%.