A major economic overhaul is underway in India as the Bharatiya Janata Party (BJP) prepares to introduce a streamlined two-rate Goods and Services Tax (GST) system. To ensure everyone understands these significant changes, the party is launching a nationwide ‘GST Savings Festival’ campaign from September 22nd to 29th.
During this week-long initiative, BJP Members of Parliament will lead ‘pad yatras,’ or foot marches, through local markets in their respective constituencies. The goal is to personally engage with traders, shopkeepers, and the general public, spreading awareness about how the new tax regime will affect them.
This campaign is strategically timed with the rollout of the updated GST framework and the upcoming festive season, positioning it as a key part of the BJP’s economic communication strategy at the grassroots level.
The journey to this new system began earlier this month at the 56th GST Council meeting. There, a pivotal decision was made to simplify GST rates into just two main slabs: 5% and 18%. This was achieved by combining the previous 12% and 28% rates into the new structure.
Under the new 5% GST slab, consumers will find essential goods and services such as various food and kitchen staples, including butter, ghee, cheese, and pre-packaged snacks. Crucial agricultural equipment like drip irrigation systems, bio-pesticides, and tractors are also included. Furthermore, items from the handicraft and small industry sectors, like sewing machines, along with vital health and wellness products, including medical devices and diagnostic kits, will benefit from this lower rate.
The broader 18% GST slab will cover most other goods and services. This includes popular consumer items like small cars, motorcycles (up to 350cc), consumer electronics, and general household goods. Many professional services will also fall under this rate, notably with a uniform 18% applied to all auto parts.
For luxury and ‘sin goods,’ a higher 40% slab will continue to apply. This category encompasses products such as tobacco, pan masala, cigarettes, bidis, aerated sugary beverages, high-end vehicles, motorcycles exceeding 350cc, yachts, and helicopters.
It’s important to note that certain fundamental services will remain completely exempt from GST. These include individual health, family floater, and life insurance premiums, as well as essential education and healthcare services.