India is on the cusp of a major financial shift with the introduction of a new two-rate Goods and Services Tax (GST) system. To ensure everyone understands this significant reform, the Bharatiya Janata Party (BJP) is kicking off a nationwide ‘GST Savings Festival.’ This week-long campaign, running from September 22nd to 29th, aims to reach traders, shopkeepers, and the general public, highlighting the benefits and changes of the new tax structure.
As part of this initiative, all BJP Members of Parliament have received directives to conduct ‘pad yatras,’ or foot marches, directly engaging with market communities within their respective constituencies to personally explain the new system.
Timed perfectly with the rollout of the updated GST framework and the festive season, this campaign is a crucial part of the BJP’s grassroots economic outreach, designed to resonate with everyday citizens and businesses.
This comes after the 56th GST Council meeting earlier this month, where a pivotal decision was made to streamline GST rates into just two main categories: 5% and 18%, by consolidating the previous 12% and 28% slabs.
Under the new system, the 5% GST slab will apply to a wide array of essential goods and services. This includes staple food and kitchen items like butter, ghee, cheese, dairy spreads, and various pre-packaged snacks such as namkeens, bhujia, and mixtures, along with utensils. Crucially, it also covers vital agricultural equipment like drip irrigation systems, sprinklers, bio-pesticides, micronutrients, soil preparation machines, harvesting tools, and even tractors and their tires. Furthermore, items for small industries and handicrafts, such as sewing machines and their components, fall into this lower bracket, as does essential health and wellness equipment, including medical devices and diagnostic kits.
The standard 18% GST slab will encompass the majority of other goods and services. This includes common consumer electronics, a broad range of household goods, and several professional services. Notably, it also applies to various automobiles, such as small cars and motorcycles up to 350cc. A significant change is the introduction of a uniform 18% rate for all auto parts, simplifying the tax structure for this sector.
For luxury and ‘sin’ goods, a higher 40% GST slab will continue to be applied. This category includes items such as tobacco products, pan masala, cigarettes, bidis, aerated sugary beverages, high-end luxury vehicles, motorcycles exceeding 350cc, yachts, and helicopters.
Additionally, several essential services will remain completely exempt from GST. These include premiums for individual health insurance, family floater plans, and life insurance policies, alongside critical education and healthcare services.