56th GST Council Meeting Updates: Finance Minister Nirmala Sitharaman on Wednesday made big-bang announcements to ease tax burden on the common man, help businesses with GST refund reforms, and push overall consumption in the economy by cutting rates on daily-use items like ghee, butter, roti, shampoo, hair oil, and toothpaste, among others. Investors were keenly awaiting the decisions of the 56th meeting of the GST Council, as markets remained positive for a couple of days.
FMCG, healthcare, infra, small autos, farm & renewable infra stocks will remain in focus on Thursday, as the government has significantly cut GST rates on these items. However, rates have been increased on tobacco, luxury vehicles, beverages, yachts, etc.
The GST Council, chaired by Union Finance Minister Nirmala Sitharaman and comprising ministers from all states, met on Wednesday to decide on the rate rationalisation, compensation cess, and ease of doing business in the country.
The GST Council cleared the Centre’s proposal to streamline the indirect tax structure into a dual slab of 5% and 18%, with a special 40% slab earmarked for sin and luxury goods. This overhaul will replace the existing four major slabs — 5%, 12%, 18%, and 28% — with a simplified two-rate system. Under the new framework, essential or “merit” goods will be taxed at 5%, while most goods and services will fall under the 18% standard rate.
It also cut GST on a large number of daily-use products, from groceries and medicines to cement and small cars. At the same time, sin goods and luxury products will become significantly more expensive as the GST Council raised rates on tobacco, fizzy drinks and high-end vehicles.
