Overview

• India’s GST structure shifts from four slabs to two core rates of 5% and 18%, with a 40% levy for a narrow set of luxury and sin goods, taking effect on September 22.
• Individual life and health insurance premiums move to a nil rate, removing the 18% tax previously applied to these policies.
• Rate cuts span everyday items and key sectors, with FMCG staples dropping to 5%, small cars and two-wheelers moving to 18% from 28%, and cement reduced to 18% from 28%.
• The government pegs the net fiscal impact at about Rs 48,000 crore as banks and brokerages expect improved affordability to boost consumption and slightly ease inflation.
• Tobacco products continue under existing GST plus compensation cess until related loans are repaid, and new process steps include stricter anti-profiteering enforcement and easier export refunds for low-value consignments.