Reduced GST Rates on 375 Items to Take Effect from Sept 22: CBIC Chief Urges Industry Outreach

As per the decision of the GST Council, reduced GST rates on 375 items are going to be effective from September 22. At the sametime, Sanjay Kumar Agarwal, head of the Central Board of Indirect Taxes and Customs (CBIC), has said that better cooperation is needed between officials and the business world to effectively implement the changes. He said that "active outreach" from the tax officials is important to help trade and industry to smoothly navigate this change.

Aggarwal said that more awareness will not only reduce confusion but will also help businesses, especially small traders and MSMEs, to adopt the reforms smoothly and take full advantage of them. The GST Council in its meeting last week approved a two-tier structure for the Goods and Services Tax (GST) at 5 per cent and 18 per cent, with a special rate of 40 per cent on tobacco and related products and ultra-luxury goods.

The new rates will be effective from September 22, except for tobacco and related products, which will be taxed at 28 per cent and a compensation cess till December 31. Currently, GST is levied in slabs of 5, 12, 18 and 28 per cent.

In his weekly newsletter to tax officials, Agarwal said lower taxes on essential commodities for the common man will reduce household expenditure, while affordable inputs for farmers, artisans and manufacturers will boost production, employment, and exports. He said these reforms are not just about cutting interest rates - they represent a paradigm shift towards a more equitable and citizen-centric tax structure.

Aggarwal wrote in the letter, "With these transformational reforms coming into effect, the need of the hour is to help the trade and industry navigate this transition smoothly. Active outreach and effective interaction will be key to ensure that taxpayers clearly understand the revised tax rates and compliance simplification."

He said greater awareness will not only reduce confusion but will also help businesses, especially small traders and MSMEs, seamlessly adopt the reforms and take full advantage of them. Aggarwal said procedural reforms will ensure ease of business for all, especially small traders and businesses.

The 56th meeting of the GST Council also decided to launch an easy GST registration scheme for small and low-risk businesses from November 1. Under the Optional Simplified GST Registration Scheme, in case of low risk applicants and applicants who, on their own assessment, determine that their output tax liability on supplies to registered persons will not exceed Rs 2.5 lakh per month (inclusive of CGST, SGST/UTGST and IGST), registration will be granted on an automatic basis within three working days from the date of submission of the application. The scheme will also have an option to voluntarily join and exit the scheme.