Government slashes GST on essential items, raises rates on luxury goods: What it means for consumers

New Delhi: The Goods and Services Tax (GST) Council has announced significant changes to GST rates on a variety of items, offering relief on essential goods while increasing taxes on luxury items. As per the new directives, the GST rate on 20-liter water bottles and bicycles has been reduced to 5%. This decision is expected to benefit consumers by making these essential items more affordable.

Luxury goods see a GST hike

While the government has offered relief for essential products, GST rates on luxury items such as high-end shoes, watches, and beauty products have been raised. These luxury goods, which were previously taxed at lower rates, will now be subject to higher GST, making them more expensive. This move is seen as part of the government's strategy to balance the tax burden across different categories of goods.

Government aims to support common consumers

By reducing the GST rates on daily-use items like bicycles and water bottles, the government aims to support the common consumer. This step is especially beneficial to rural and urban households that rely on these essentials. The reduced rates are anticipated to stimulate demand and lower the overall cost of these goods.

Balancing fiscal policy through tax revisions

The increase in GST rates on luxury goods, including shoes and watches, aligns with the government’s broader fiscal strategy. By imposing higher taxes on non-essential, luxury items, the authorities hope to generate more revenue while keeping essential goods affordable for the masses. This shift in taxation is likely to have a direct impact on consumer purchasing patterns.

Industry experts have responded positively to the reduction in GST on essential goods, though there is concern about the potential dip in sales for luxury products. The dual approach in taxation is intended to strike a balance between affordability for essential goods and revenue generation from luxury items.