Key Points

"Before 2014, the taxation system was very complex and goods were taxed at multiple levels. GST has made it simple. This rationalisation and simplification in GST reforms will make people's lives easier," he said at the presser.

All daily-use goods saw GST reduced under the next-generation reforms, he said.

"The promise PM Modi had made from the ramparts of the Red Fort have been fulfilled," he said.

On September 22, the first day of Navratri, all changes in GST rates will come into effect.

"This GST reform will push further India's economy. From pure economics point of view, our GDP is currently at Rs 3.30 lakh crore, of which Rs 2.02 lakh crore is our consumption. Even if our consumption rises by 10%, we will have Rs 20 lakh crore extra consumption, contributing to GDP," he gave a back of the envelope calculation as to what to extent can this GST reform boost the country's consumption.

"Consumption has a positive multiplier effect and it creates a virtuous cycle in the economy," he continued.

Sweeping changes have been made what the government termed the next-generation GST (Goods and Services Tax) rationalization. It came just days after Prime Minister Narendra Modi announced it from the ramparts of the Red Fort on Independence Day. This is aimed at reducing the tax burden on citizens while stimulating economic growth.

The GST Council, approved significant rate cuts across multiple sectors, which the government has described as a Diwali gift for the nation. The announcements were made by Finance Minister Nirmala Sitharaman.

On the essential items front, items of daily household use will now cost less. Products such as hair oil, shampoo, toothpaste, toilet soap bars, toothbrushes, and shaving cream, which earlier attracted 18 per cent GST, will now fall under the 5 per cent bracket.

Similarly, butter, ghee, cheese, dairy spreads, pre-packaged namkeens, bhujiya, and mixtures have all seen their GST rate reduced from 12 per cent to 5 per cent.

Utensils, feeding bottles, baby napkins, and clinical diapers have also become cheaper with the rate cut to 5 per cent.

Sewing machines and their parts, previously taxed at 12 per cent, will now attract only 5 per cent GST.

Farmers and the agriculture sector stand to gain significantly from these reforms as tractor tyres and parts, earlier under 18 per cent GST, will now be taxed at just 5 per cent, while tractors themselves will also see their rate reduced from 12 per cent to 5 per cent.

Farmers and the agriculture sector stand to gain significantly from these reforms as tractor tyres and parts, earlier under 18 per cent GST, will now be taxed at just 5 per cent, while tractors themselves will also see their rate reduced from 12 per cent to 5 per cent.

As expected, the healthcare sector has received crucial relief as well, with individual health and life insurance policies being fully exempted from GST, from 18 per cent earlier.

The tax on thermometers has been reduced from 18 per cent to 5 per cent, while medical-grade oxygen, diagnostic kits, reagents, glucometers, and test strips will also now fall under the 5 per cent category instead of 12 per cent. Corrective spectacles see their GST reduced to 5 per cent.

Education-related items, too, will now be cheaper as maps, charts, globes, pencils, sharpeners, crayons, and pastels, which previously attracted a 12 per cent GST, will now be fully exempt.

Exercise books, notebooks, and erasers have also been moved to the nil tax slab, making basic educational tools more affordable for students and parents.

The automobile sector, one of the largest contributors to the Indian economy, will also benefit from the reforms. Petrol and petrol hybrid cars, along with LPG and CNG variants not exceeding 1200 cc and 4000 mm in length, will now be taxed at 18 per cent instead of 28 per cent.

Diesel and diesel hybrid cars of up to 1500 cc and 4000 mm will see the same reduction.

Three-wheeled vehicles, motorcycles with an engine capacity of up to 350 cc, and motor vehicles used for goods transport will also see their GST rates reduced from 28 per cent to 18 per cent.

Electronic appliances, which had long remained in the highest tax slab, have now been brought down to a more reasonable level. Air conditioners, televisions above 32 inches, including LED and LCD models, monitors, projectors, and dishwashing machines will all now attract 18 per cent GST instead of the earlier 28 per cent.

Alongside these rate reductions, the GST Council has also introduced important process reforms. Applicants will now receive automatic registration within three working days, based on system-driven data analysis.

- ANI