The government is to reduce the GST from 12% to 5 % on the products used daily by the middle class. This move of the government will be the gift for the middle class as the products used on daily basis will be cheaper.
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NEW DELHI: According to the sources, the Central Government is planning to reduce the GST from 12% to 5% or to eliminate the 12% GST slab altogether.
This particular change aims to make the essential goods cheaper which are used by the middle class or the low income families.
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According to the sources, following a series of income tax concessions announced earlier this year, the Central Government is now planning to offer further relief to middle- and lower-income households by reducing the Goods and Services Tax (GST).
The government is reportedly considering the complete removal of the 12% GST slab or the reducing GST on several items currently taxed at 12% into the more affordable 5% bracket.
The proposed structure aims at goods commonly used products by the middle class and economically weaker sections. These include essential items such as toothpaste, tooth powder, umbrellas, sewing machines, pressure cookers, kitchen utensils, electric irons, geysers, small-capacity washing machines, bicycles, readymade garments priced above ₹1,000, footwear in the ₹500–₹1,000 range, stationery items, vaccines, ceramic tiles, and agricultural tools, among others.
The final decision will result to the drop of price of the essential products, which means consumers will have to pay less tax on these goods and they can save money in their monthly expanse.
Sources indicate that the proposed GST rate cut could cost the government ₹40,000 to ₹50,000 crore. However, the Centre is ready to bear the initial fiscal impact, expecting a surge in consumption to offset the loss over time. The rationale is that lower prices will boost demand, expanding the tax base and improving long-term GST revenue.
Finance Minister Nirmala Sitharaman recently hinted at possible GST revisions, emphasizing the government’s commitment to a more rational tax structure and relief on essential items for the middle class.
Despite the Centre’s push, several states namely Punjab, Kerala, Madhya Pradesh, and West Bengal have opposed the proposed GST rate changes.
Any revision requires approval from the GST Council, where these states hold voting rights. So far, only one vote has occurred in the Council’s history, with most decisions taken by consensus.
The proposal is likely to be discussed in the 56th GST Council meeting, expected later this month, with a mandatory 15-day notice required for convening.
Currently, the 12% GST slab covers commonly used items by middle- and lower-income groups—products that aren’t considered absolute essentials, which fall under the 0% or 5% tax brackets.
List of Goods and Services that fall in the 12% GST salb:
- Tooth powder
- Sanitary napkins (originally taxed, now at 0 per cent, but related feminine hygiene items may still fall under 12 per cent)
- Hair oil
- Soaps (some categories, others are at 18 per cent)
- Toothpaste (some branded variants at 12 per cent, others at 18 per cent)
- Umbrellas
- Sewing machines
- Water filters and purifiers (non-electric types)
- Pressure cookers
- Cookware and utensils made of aluminium, steel (some are at 12 per cent)
- Electric irons
- Water heaters (geysers)
- Vacuum cleaners (low-capacity, non-commercial)
- Washing machines (small capacity)
- Bicycles
- Carriages for disabled persons
- Public transport vehicles (when sold, not for fare)
- Readymade garments (priced above Rs 1,000) Footwear priced between Rs 500 and Rs 1,000
- Most vaccines
- Diagnostic kits for HIV, Hepatitis, TB
- Certain Ayurvedic and Unani medicines
- Exercise books
- Geometry boxes
- Drawing and colouring books
- Maps and globes
- Glazed tiles (basic, non-luxury variants)
- Ready-mix concrete
- Pre-fabricated buildings
- Agricultural equipment like mechanical threshers
- Packaged foods such as condensed milk, frozen vegetables (some variants)
- Solar water heaters
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