GST Next-Gen Reforms: A Savings Revolution for the Masses

The GST next-gen reforms, initiated from Monday, are expected to cut household bills by 13% on groceries and daily essentials. Additionally, a small car buyer could save roughly Rs 70,000.

Government estimates suggest that the purchase of stationery, clothing, footwear, and medicines will save consumers 7-12%, whereas savings on individual health and life insurance policies could reach 18%, as these have been exempted from GST starting Monday.

The reform, dubbed 'GST Bachat Utsav' by Prime Minister Narendra Modi, sees 375 items, including groceries, clothing, and automobiles, becoming cheaper. The GST rate has been reduced to 5% on tractors from the previous 12-18%, allowing buyers a saving of Rs 40,000 on certain models.

Buyers of bikes and scooters up to 350 cc can expect a reduction of Rs 8,000, with TVs over 32 inches dropping by Rs 3,500, and air conditioners seeing a Rs 2,800 cut due to a GST rate decrease from 28% to 18%.

In a Sunday address, Modi described the GST Bachat Utsav and an increased income tax exemption as a 'double bonanza' for the populace, estimating annual savings of Rs 2.5 lakh crore for households.

The reformed GST now operates under a two-tiered structure entailing 5% and 18% tax rates for most goods and services, leaving a 40% charge for ultra-luxury items. Products like tobacco remain in the 28% plus cess category.

Since GST's initiation on July 1, 2017, its structure has evolved from four to two tax slabs, simplifying financial burdens on consumers nationwide. About 99% of goods previously taxed at 12% now shift to a 5% rate, leading to a further 90% of items moving from a 28% to an 18% tax bracket.

(With inputs from agencies.)