GST tax rates on common use items ranging from hair oil to corn flakes, TVs, and personal health and life insurance policies were slashed after the all-powerful GST Council on Wednesday approved a complete overhaul of the tangled Goods and Services Tax regime. The GST Council approved rate overhaul by limiting slabs to 5 per cent and 18 per cent effective from September 22, the first day of Navaratri. Almost all personal use items will see rate cuts as the government looks to boost domestic spending and cushion the economic blow of the US tariffs. Briefing reporters after a marathon daylong GST Council meeting, Union Finance Minister Nirmala Sitharaman said all decisions were taken unanimously, with no disagreement with any state. The panel approved simplifying the goods and services tax (GST) from the current four slabs -- 5, 12, 18 and 28 per cent -- to a two-rate structure -- 5 and 18 per cent. A special 40 per cent slab is also proposed for a select few items such as high-end cars, tobacco and cigarettes. The new rates for all products, except gutkha, tobacco and tobacco products and cigarettes, will be effective September 22 -- the first day of Navratri. While daily use food items will continue to attract nil tax rate, common use food and beverages ranging from butter and ghee to dry nuts, condensed milk, sausages and meat, sugar boiled confectionery, jam and fruit jellies, tender coconut water, namkeen, drinking water packed in 20-litre bottles, fruit pulp or fruit juice, beverages containing milk, ice cream, pastry and biscuits, corn flakes and cereals, and sugar confectionery are likely to see a cut in tax rate to 5 per cent from the current 18 per cent. The Indian economy is heavily reliant on consumption with private consumption accounting for 61.4 per cent of the nominal GDP last fiscal. The GST reforms are likely to boost the economy by up to 0.5 percentage points by the second year of its implementation, effectively neutralising the full impact of the US tariff, economists. 
 

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