Guwahati: Prime Minister Narendra Modi on Wednesday welcomed the introduction of a simplified two-tier Goods and Services Tax (GST) structure, which will come into effect from September 22.
The Prime Minister said the move, approved by the GST Council, would benefit farmers, MSMEs, the middle class, women, and youth.
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In a post on social media platform X, Modi described the decision as a step towards “next-generation GST reforms.” He said the government had prepared a detailed proposal for rationalising GST rates and processes with the aim of improving ease of living and strengthening the economy.
Finance Minister Nirmala Sitharaman announced the new structure late on Wednesday evening, confirming that the existing 12% and 18% slabs will be merged into a simplified two-rate system of 5% and 18%. Most items under the 28% category will move to lower rates, while a special 40% slab will remain for select luxury goods such as high-end cars, tobacco, and cigarettes.
“These reforms have been carried out with a focus on the common man,” Sitharaman said, adding that tax rates on daily-use products had been reduced significantly. She said the agriculture, labour-intensive, and healthcare sectors would gain from the changes.
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Under the revised structure, parathas, erasers, maps, pencil sharpeners, and exercise books will attract zero GST. Items such as feeding bottles, tableware, umbrellas, utensils, bicycles, bamboo furniture, and combs will now fall under the 5% slab, down from 12%. Similarly, products including shampoo, toothpaste, toothbrushes, soap, talcum powder, and hair oil will see GST reduced from 18% to 5%.
The revised rates will be implemented from September 22, coinciding with the beginning of Navratri.