Rates simplified; luxury items taxed higher, essentials exempted
New Delhi, 9 Sept — The government has cleared a major GST revamp, simplifying rates to two key slabs of 5% and 18%. Health insurance has been exempted, while luxury cars, premium air travel, and tobacco products will attract a steep 40% tax.
The changes, expected to cost the exchequer around ₹47,700 crore, are aimed at stimulating demand during the upcoming festive season. Officials said the new structure would make compliance easier for businesses and provide relief for households.
Economists believe the reform is a step toward greater tax clarity but warn that high-end consumption may take a hit. Still, the middle-class benefit is expected to translate into stronger sales in FMCG, electronics, and daily-use categories.