In a major relief for middle- and lower-income households, the Central government is planning a major Goods and Services Tax (GST) overhaul that could make a wide range of essential items significantly cheaper. Sources indicate that the government is actively exploring either scrapping the existing 12% GST slab or reclassifying key items under the lower 5% bracket.
- The move aims to ease the cost burden on the common man and includes a range of daily-use products such as:
- Toothpaste and tooth powder
- Cooking utensils and pressure cookers
- Electric irons, geysers, and small washing machines
- Bicycles and umbrellas
- Readymade garments priced above Rs.1,000
- Footwear priced between Rs.500 and Rs.1,000
- Stationery items and diagnostic kits
- Ceramic tiles and agricultural tools
The reclassification could cover vaccines, public transport vehicles, ayurvedic medicines, solar water heaters, and even packaged food items like frozen vegetables and condensed milk.
Government to Absorb Rs.40,000–Rs.50,000 Crore Revenue Hit
The proposed GST cut is expected to result in a revenue shortfall of ₹40,000 crore to ₹50,000 crore, but the government appears ready to absorb the impact. Officials believe the loss will be offset by a surge in consumption, as reduced prices will make these items more affordable for a wider section of the population.
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Finance Minister Nirmala Sitharaman recently indicated that changes to GST slabs are under active consideration. The government also plans to simplify the GST structure, making compliance easier for small traders and manufacturers.
Political Opposition and Next Steps
However, the proposed restructuring is yet to receive full backing from all states. States like Punjab, Kerala, Madhya Pradesh, and West Bengal have reportedly expressed concerns. Since GST rate changes require approval from the GST Council, which includes representatives from both Centre and states, the issue will be discussed in the upcoming 56th GST Council meeting, expected later this month.
Notably, decisions in the Council are generally reached through consensus, with voting having occurred only once since the system’s implementation.
The 12% GST slab currently covers goods that are essential but not exempt or heavily taxed, making them a critical part of the consumption basket for middle-class India.
