GST Revamp: Tax Cuts on Water Bottles and Bicycles, Hike for Luxury Goods
- Posted on October 19, 2024
- News
- By Arijit Dutta
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The GST Council’s GoM has reduced GST on 20-litre water bottles, bicycles, and exercise notebooks to 5%, while raising taxes on luxury items like expensive shoes and watches to 28%. The changes aim to boost government revenue by ₹22,000 crore and create a balanced tax system.
The GST Council's Group of Ministers (GoM) has approved significant changes in tax rates, aimed at balancing revenue and addressing public concerns. The tax on 20-litre packaged drinking water bottles, bicycles, and exercise notebooks has been reduced to 5% from the earlier 18%, offering relief to consumers. Conversely, luxury items such as high-end wristwatches costing above ₹25,000 and shoes priced over ₹15,000 will now see an increased GST rate of 28%, up from 18%.
These modifications are expected to generate an estimated ₹22,000 crore in additional revenue for the government. The GoM, headed by Bihar Deputy Chief Minister Samrat Chaudhary, consists of six members, including finance ministers from Uttar Pradesh, Rajasthan, Karnataka, and Kerala.
This GST rate rationalization comes after the average GST rate fell below the revenue-neutral rate of 15.3%. The committee proposed reducing taxes on bicycles priced below ₹10,000 to 5% from the existing 12%, while beauty products like hair dryers and makeup preparations could be taxed at 28%.
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The restructuring of the tax slabs is part of the government's efforts to create a balanced GST framework. The current GST structure features four tax slabs: 5%, 12%, 18%, and 28%, with essential goods taxed at lower rates and luxury items taxed higher.