New Delhi: Finance Minister Nirmala Sitharaman on Tuesday announced sweeping cuts in Goods and Services Tax (GST) rates on several daily-use items, while launching a sharp attack on the Congress party over its criticism of the 40 per cent “sin goods” slab.
Addressing a press conference after a marathon meeting of the GST Council, Sitharaman said the Congress had failed to implement GST during its tenure and was now questioning reforms brought in under the Modi government.
“Is the Congress Party demanding a 5 per cent tax on tobacco and gutkha? They must clarify if that is their stand,” Sitharaman said, hitting back at Opposition queries on the special tax bracket.
The Finance Minister maintained that the 40 per cent slab applies only to tobacco and related products, categorised as sin goods. “These items are already under compensation cess and will continue at 40 per cent. This is outside the general framework of GST,” she added.
The GST Council approved a major simplification of the tax structure, moving from the existing four slabs of 5, 12, 18 and 28 per cent to just two 5 and 18 per cent. In addition, the 40 per cent slab will remain exclusively for tobacco, cigarettes and high-end luxury cars.
Sitharaman said the decisions were unanimous, with no opposition from any state. The new rates, excluding gutkha and tobacco products, will come into effect from September 22, the first day of Navratri.
Food & Beverages: Butter, ghee, dry fruits, condensed milk, sausages, meat products, confectionery, jams, fruit jellies, tender coconut water, namkeen, fruit juices, milk-based beverages, ice cream, pastries, biscuits, corn flakes, cereals all to be taxed at 5% (down from 18%).
Staples: Chapati and paratha to attract nil tax (down from 5%).
Consumer Goods: Tooth powder, feeding bottles, kitchenware, umbrellas, utensils, bicycles, bamboo furniture, combs reduced from 12% to 5%.
Personal Care Products: Shampoo, talcum powder, toothpaste, toothbrushes, soaps, hair oil reduced from 18% to 5%.
In a move to expand social security coverage, Sitharaman announced that all individual life and health insurance policies will now attract zero tax.
Calling the changes “second-generation GST reforms” under Prime Minister Narendra Modi’s leadership, Sitharaman said the cuts would bring relief to households, MSMEs and labour-intensive sectors, while also boosting domestic consumption amid global economic pressures.
“Congress should decide whether it wants to oppose or support measures that are clearly in the interest of the people. Ultimately, the public will see through their stance,” she asserted.
