The government is actively discussing reducing GST rates on more than 100 items, which could lead to significant price drops for everyday goods. This move comes as part of a broader effort by the Group of Ministers (GoM) to bring relief to the common man. The GoM, led by six key ministers from different states, is looking into lowering the tax rates for goods currently in the 12% GST slab, with some likely to drop to the 5% slab. These discussions could have a meaningful impact on the cost of products like bicycles, bottled water, and medical supplies.
GST Rate Cut Discussions: Big Focus on Common Goods
The Group of Ministers met on September 25, 2024, where West Bengal Finance Minister Chandrima Bhattacharya provided updates on the deliberations. One of the central topics was reducing GST rates on essential goods to help ease the financial burden on consumers. Products such as bicycles, a key mode of transport for millions, and bottled water are at the forefront of these discussions.
In the current GST framework, there are four major tax slabs: 5%, 12%, 18%, and 28%. The GoM is now exploring the possibility of lowering the 12% GST rate on certain items to 5%, which could make everyday essentials more affordable. However, to offset the revenue loss, the government may consider increasing the 28% GST rate on other goods, such as beauty products and bottled beverages.
Bicycles and E-cycles in Focus for Tax Relief
One of the main items under consideration for a rate cut is the humble bicycle, used extensively by people across the country for transportation. Presently, bicycles are taxed at 12%, while e-cycles benefit from a lower 5% GST rate. The GoM is likely to consider bringing regular bicycles in line with e-cycles by reducing their tax rate. This move could significantly lower the cost of bicycles, providing relief to low-income households who rely on them as their primary mode of transportation.
Medical Items and Essentials Could Get Cheaper
Medical and pharmaceutical items, which are crucial for public health, may also see a reduction in their GST rates. Currently placed in the 12% tax slab, the GoM is considering reducing the rate to 5%. This would directly impact the cost of healthcare, making medicines and medical equipment more affordable for the general population.
Possible Impact on Hair Dryers, Beauty Products
While some goods may get cheaper, the GoM is also exploring increasing GST rates on luxury items. Products like hair dryers, hair colors, and other beauty-related items may be moved from the 18% GST slab back to the 28% category. This is in line with the government’s strategy to provide relief on essential goods while collecting more taxes from non-essential or luxury products.
Next Steps: Final Decision in October
The next GoM meeting, scheduled for October 20, 2024, will provide more clarity on these potential changes. If the GoM finalizes its recommendations, they will then be presented to the GST Council, which is chaired by the Union Finance Minister. The Council will take the final call on whether these proposals will be implemented.
For now, consumers can remain hopeful that they may soon see a reduction in prices for essential goods, making everyday living a little more affordable.
