Govt may break four-tiered GST slab into two by Diwali

The GST Council will meet in September to finalise the launch of new rates. Besides making certain items cheaper, it will correct the inverted duty structure, which means the GST paid on raw materials and services is higher than the one on the final product.

For instance, yarn is taxed at 5% and finished garments carry a 5% GST rate, which requires the manufacturer to pay more tax on raw materials than on sales of finished products.

The new regime will reduce the refund delays and facilitate manufacturing. It will simplify product categorisation, facilitate pre-filled returns and quicker registration for MSMEs.

Products with 5% GST

Personal care items, like toothpaste, soaps, and hair oil.

Food and groceries

Electronics

Apparel and footwear

Health

Education

Transport and Energy products, such as public transport vehicles, solar water heaters, and agricultural machinery.

Products with 18% GST

Items used in construction

Appliances

Automotive

Beverages

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