GST 2.0: New Rules Effective September 22, Which Products Will Be Cheaper?
The government has recently introduced significant changes to the GST framework, which are set to come into effect from September 22. These revisions are expected to make several essential commodities more affordable. Two new GST slabs have been determined: 5% and 18%.
Reasons for Price Reduction and Government Directives:
In the 56th GST Council meeting, the GST rates for over 400 products were altered. This includes packaged food items, soaps, shampoos, and other daily use products, for which the GST rate is being reduced. Consequently, the prices of these products are expected to decrease.
However, it is not feasible to change the retail prices of products already in stores within such a short period. Therefore, the government has instructed all manufacturers to publish new price lists through advertisements and in stores before September 22. This will help consumers understand which products have become cheaper.Additionally, pharmacists have also been asked to display new retail prices outside their shops, as older medicine packages will still show prices based on the old GST rates. This could otherwise deprive consumers of the benefits of the new, lower GST rates.
GST on Hotels and Other Services:
The Ministry of Finance has clarified that hotel rooms with a rent of ₹7500 or less per day will be subject to only 5% GST. Hotel owners will not be able to claim Input Tax Credit (ITC) for these rooms. Previously, there was a misconception that hotel owners could charge 18% GST if they claimed ITC, but the government has revoked this and confirmed that 5% GST will apply even in such cases.Similarly, beauty and physical care services (such as gyms) will also incur 5% GST. The benefit of 18% GST with ITC will not be available for these services.
Health and Life Insurance Exempt from GST:
The government has further announced that individually purchased health and life insurance policies have been made completely GST-exempt, and no GST will be levied on them.Through these measures, the government aims to ensure that the benefits of GST rate reductions directly reach consumers.