The Goods and Services Tax (GST) Council has announced significant reforms, set to take effect on September 22. The changes will simplify the tax structure, with only two main GST rates remaining: 5% and 18%. A special 40% rate will be applied to select luxury items like pan masala, cigarettes, and sugary carbonated drinks.

Finance Minister Nirmala Sitharaman highlighted that several products commonly used by the middle class, such as televisions, air conditioners, and motorcycles under 350 cc, will now be taxed at 18%, making them more affordable.

The reform also targets vehicles, with petrol, LPG, and CNG cars under 1,200 cc and diesel cars under 1,500 cc—both under 4,000 mm in length—shifting from the 28% tax rate to 18%. However, cars exceeding these specifications, along with motorcycles over 350 cc, yachts, personal aircraft, and racing cars, will incur a 40% GST.

Electric vehicles (EVs) will continue to be taxed at the lowest rate of 5%. Other items like dishwashers, monitors, and projectors will also fall under the 18% rate. Additionally, the tax on cement and three-wheelers will be reduced to 18% from the previous 28%.

These GST adjustments are designed to ease the financial burden on citizens while boosting consumption and supporting economic growth.

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