Big relief to common man; Next-gen GST reforms by Diwali

KOCHI: The central government's decision to unify the Goods and Services Tax (GST) is set to give relief to consumers. The prices of products, essentially used by commoners, including medicines, medical devices, electronic home appliances, handicrafts, agricultural products, pesticides, fertilisers, will come down. The tax levied on health and non-health insurance premiums will also be reduced.

The decision was made to introduce 5% and 18% slabs instead of the existing 5%, 12%, 18% and 28% slabs. With this, the GST rate on products in the 12% slab will come down to 5% and the rate on the 28% slab to 18%.

GST registration will be increased from Rs 1.15 crore to Rs 2 crore. For this, the registration process will be expedited. Prime Minister Narendra Modi announced in his Independence Day message that the changes will be implemented by Diwali.

The proposals for GST rate unification and reform have been sent to the GST Council, of which the state finance ministers are members. A decision will be taken in the meeting to be held in September or October. The Centre is only responsible for submitting the proposals.

1. Tax on gold jewellery may be reduced

The GST on gold and precious metals, which is currently taxed at 3%, will be reduced to less than 1%. The tax on diamonds and semi-precious stones, which is taxed at 0.25%, will also be reduced to less than 1%.

2. Insurance Premium

The proposal to exempt GST on premiums for health and life insurance plans, which currently attract 18 per cent tax, is under active consideration. If not, it will be reduced to five per cent.

The duty on products that are harmful to health, such as tobacco, cigarettes, aerated drinks like Pepsi and Coca-Cola, will increase from 28 per cent to 40 per cent. The total tax on these, including cess, will remain at the current 88 per cent.