Indian Finance Minister Nirmala Sitharaman decided yesterday to cut taxes on hundreds of consumer items ranging from soaps to small cars to spur domestic demand in the face of economic headwinds from punishing US tariffs.
The goods and services tax (GST) panel approved lowering taxes on the so-called common man items and simplifying their structure, Sitharaman, who heads the panel that includes ministers from all states, told a late night Press conference.
GST was criticised for its complicated structure and numerous tax categories. To simplify this, the panel approved the two-rate structure of 5 per cent and 18pc, instead of four currently that also include tax bands of 12pc and 28pc.
Sitharaman said the panel approved cuts in consumer items such as toothpaste and shampoo to 5pc from 18pc, and on small cars, air conditioners, and televisions to 18pc from 28pc.
She said GST will be exempted on all individual life insurance policies and health insurance.
The panel also approved a higher tax of 40pc on ‘super luxury’ and ‘sin’ goods such as cigarettes, cars with engine capacity exceeding 1500 cc, carbonated beverages, the minister said. The new rates will come into effect on September 22.
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