Overview

• The Council approved a simplified GST structure of 5% and 18% with a 40% rate for select luxury and demerit items, taking effect on September 22.
• Daily-use goods see broad relief as UHT milk, paneer and rotis go tax-free, personal care items move to 5%, school supplies are cut to nil or 5%, and 33 life-saving drugs and individual life and health insurance are exempt.
• Big-ticket reductions shift cement, air-conditioners and televisions, small cars, two-wheelers up to 350cc, tractors and auto parts to the 18% slab, while electric vehicles retain 5%.
• Tobacco products remain at 28% plus compensation cess until state compensation loans are repaid, after which they move to the 40% category.
• Markets gained after the announcement and industry leaders welcomed a demand boost, with Morgan Stanley expecting stronger consumption during the festive season and a potential 20–30 basis point easing in headline inflation.