Overview

• Rates consolidate to 5% and 18% with a 40% band for select sin and ultra‑luxury items, as the compensation cess is scrapped except on tobacco.
• Food staples and mass‑use goods shift to 0% or 5% while individual life and health insurance premiums turn tax‑free and many everyday services drop to 5% without input tax credit.
• The Finance Ministry pegs the short‑term revenue impact at about ₹48,000 crore as Finance Minister Nirmala Sitharaman projects roughly ₹2 lakh crore staying with households to spur demand.
• CBIC guidance instructs immediate price pass‑through with revised MRPs allowed via stickers, and retailers and manufacturers—from Dinshaw’s to auto makers—say reductions will apply from Sept. 22.
• Auto taxes fall to 18% for small cars, two‑wheelers up to 350cc and most parts, SUVs face 40%, EVs remain at 5%, and analysts foresee demand gains as states issue go‑live notifications such as Uttarakhand’s.