GST Overhaul on Cards: Govt Plans Tax Cuts on FMCG, Cars, Electronics

There may be a 10 percent reduction in GST tax on about 175 products, from shampoo and hybrid cars to consumer electronics goods.

As per Amar Ujala, government sources say, a decision on this is expected in the GST Council meeting to be held on 3-4 September. The biggest reform of almost a decade is taking place in the Goods and Services Tax (GST) system. This reform is taking place amid tense trade relations with the US. The Narendra Modi government at the Centre is repeatedly appealing to the people of the country to increase the use of Indian products.

As per Amar Ujala sources, tax on consumer goods like talcum powder, toothpaste, and shampoo will be reduced from 18 percent to 5 percent. This will give a tremendous boost to the business of companies in these sectors. Tax on air conditioners and television sets can be reduced from 28 percent to 18 percent before the Diwali shopping season starting in October.

The proposed tax cut aims to promote domestic consumption. This will help in increasing agricultural income. Also, the decline in exports to the US is to be reduced by encouraging self-reliance among Indian manufacturers.

There is a plan to reduce the tax on major export items like fertilizers, agricultural machinery and tractors and their parts from the current 12 percent or 18 percent to 5 percent. This reduction will also apply to the textile sector, which is one of the largest exporters. It has been heavily affected by the US tariff attack.

The proposed tax cut is expected to boost sales of small cars. However, big cars, which are more than 4 metres in length and have bigger engine capacity, will attract a higher GST rate of 40 per cent, up from 28 per cent. There are also plans to increase taxes on services such as betting, casinos and horse racing, along with commodities such as coal.