56th GST Council Meeting: Know Major GST Rate Changes Proposed for Goods and Services

The 56th meeting of the Goods and Services Tax (GST) Council concluded with sweeping recommendations on GST rate revisions across several sectors, marking one of the most comprehensive overhauls since the regime’s inception. The proposed changes are aimed at rationalising rates, easing costs on essentials, and discouraging the consumption of luxury and sin goods.

Food and Dairy Products

The Council has granted relief to consumers on daily essentials. Ultra-High Temperature (UHT) milk and packaged paneer have been moved to the nil tax bracket, while butter, ghee, and cheese see a reduction from 12% to 5%. Ice cream, pasta, biscuits, cakes, pastries, and fruit-based products like juices and jams have also been brought down to 5%. However, aerated drinks and soft beverages will now attract a steep 40% tax, up from 28%, a move expected to curb consumption of sugary drinks.

Agriculture and Nuts/Fruits

Tax rates on nuts such as almonds, pistachios, and cashews, along with dried fruits like figs and mangoes, have been slashed to 5% from 12%. Malt, starches, and vegetable extracts also fall in the same reduced bracket, making healthier food categories more affordable.

Tobacco and Sin Goods

The government has hiked GST on pan masala, gutkha, chewing tobacco, and nicotine products from 28% to 40%. Cigarettes and cigars are subject to the same increase. Interestingly, bidis have seen a reduction to 18%, likely to provide relief to lower-income consumers.

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Healthcare and Pharmaceuticals

In a significant relief measure, life-saving drugs such as Agalsidase and Imiglucerase will now attract nil GST. All other medicines, including Ayurvedic and Homeopathic products, will face a reduced rate of 5%. Medical oxygen, diagnostic kits, thermometers, and blood glucose monitors have also been lowered to 5%, effectively cutting healthcare costs.

Energy and Industry

The Council approved higher rates for coal (5% to 18%), cement (28% to 18%), and biodiesel (12% to 18%). However, renewable energy devices, pumps, and agricultural engines have been lowered to 5%, aligning with sustainability objectives.

Automobiles and Transport

Electric vehicles, tractors, and bicycles now attract only 5% GST, while small cars and motorcycles under 350cc are reduced to 18%. Luxury cars, SUVs, high-powered bikes, yachts, and personal aircraft will now attract 40%, substantially raising their cost.

Services

Transport services such as multimodal transport have been cut to 5%, while select job work activities also fall to 5%. However, construction-related contracts like offshore oil and gas and earthwork are set at 18%.

The Council’s rate revisions broadly benefit dairy, agriculture, pharmaceuticals, handicrafts, renewable energy, and the EV sector, while heavily taxing tobacco, soft drinks, luxury vehicles, and polluting industries.

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