GST Rate Cut May Slash Prices

Over 175 consumer and essential goods may see tax reduction, making them more affordable.

Bhubaneswar : The Goods and Services Tax (GST) Council is preparing for a significant restructuring of tax slabs, with expectations of a 10% reduction on nearly 175 items. Products ranging from televisions and shampoos to hybrid cars and consumer electronics could become cheaper once the decision is formalized. The upcoming GST Council meeting, chaired by Union Finance Minister Nirmala Sitharaman in the first week of September, is expected to finalize the plan.

A Response to Global Trade Challenges

The move comes as a strategic step by the Centre to offset the impact of the 50% tariff recently imposed by the United States on Indian goods. By slashing domestic GST rates, the government aims to support local manufacturers and ensure affordability for consumers. Officials said the decision is also aimed at protecting industries hit hardest by trade barriers, including textiles and agriculture.

FMCG Sector to Benefit From Lower Slabs

Among the biggest beneficiaries will be fast-moving consumer goods (FMCG). Products such as body powder, toothpaste, and shampoo are currently taxed at 18%. If the proposed changes are approved, they will be shifted to the 5% slab. This could provide a major boost to companies like Hindustan Unilever and Godrej Industries, as well as to millions of households that rely on these essentials.

Consumer Electronics and Automobiles in Focus

Air conditioners and televisions, which are currently in the 28% slab, may soon fall to the 18% slab. If approved, this will benefit global brands such as Samsung, LG Electronics, and Sony, while also making durable goods more accessible to middle-class consumers. Small petrol hybrid cars are also likely to be shifted to the lower 18% slab, while two-wheelers with engines below 350 cc could see a tax reduction.

However, luxury vehicle manufacturers may not share the same fortune. Large and premium cars could face a rise in GST, a move aimed at balancing affordability for common-use goods while ensuring higher taxation on luxury consumption.

Relief for Agriculture and Rural Economy

Farmers and rural consumers are expected to benefit significantly from the proposed changes. Fertilizers, agricultural machinery, and tractors, which currently fall under the 12% and 18% slabs, may be reduced to 5%. Officials said this could lower input costs for farmers and encourage mechanization, thereby improving agricultural productivity. The textile sector, badly hit by U.S. tariffs, is also being considered for GST relief to help restore competitiveness in the global market.

Tax Increase on Gambling, Casinos, and Imported Liquor

While several sectors are set to benefit from GST cuts, others may face higher taxes. Sources indicate that gambling, casinos, and horse racing could see an increase in GST as part of the government’s effort to discourage non-essential spending. Similarly, imported liquor and foreign-made beverages may attract higher rates.

Industry Voices Demand Broader Relief

Ahead of the GST Council meeting, several industry associations have submitted proposals for reclassification of goods. The Water Purifier Manufacturers’ Association, in a letter to the Revenue Secretary, requested that water purifiers be moved from the 18% slab to 5%. The association argued that purifiers cannot be treated as luxury items like air-conditioners or cars, since they provide safe drinking water, a basic necessity.

Balancing Affordability and Revenue

Experts note that the proposed reforms mark one of the largest structural adjustments in GST since its rollout in 2017. By lowering rates on essential and mass-use goods, the government seeks to stimulate demand and provide relief to households amid global economic uncertainties. At the same time, by increasing taxes on luxury items and gambling-related activities, it aims to protect revenue flow.

If approved, the rate cuts will bring cheer to millions of consumers while giving industries fresh impetus to grow in an increasingly competitive global market. The Council’s final decision, expected next month, will determine the balance between affordability, industry support, and revenue sustainability.