Quick Answer
- Hence, if the GST on a specific product has been reduced by 10%, the customer will see a direct 10% discount in the price of that product in the market.
- We have studied the new GST rates in detail, and here’s a detailed breakdown of which items will get more affordable, and the list of products set to get a price hike.
- However, companies may not pass on these discounts to the customer, and instead increase the prices of the goods, equivalent to the GST difference.
The Government of India has introduced much-needed changes to the GST rates in India, notably removing the 28% slab. After this change, the majority of goods, which were earlier taxed at 28% will now attract an 18% GST, making them significantly cheaper. The new rules have also exempted life and medical insurance, select food products, educational stationery, and many other products, making them tax-free.
However, the tax rates on certain luxury goods like high-end cars, sin goods like alcohol and cigarettes, sugar drinks, etc., have been hiked to 40%. This new GST slab is set to make these products more expensive to control their consumption.
We have studied the new GST rates in detail, and here’s a detailed breakdown of which items will get more affordable, and the list of products set to get a price hike. Let’s have a look.
List of Products That Will Get Cheaper
Here are quick highlights of all the products and services that will get cheaper under the new GST rates:
- Health insurance, life insurance, and family floater policies.
- Health-related products like thermometers, diagnostic kits, glucometers, vision corrective glasses, etc.
- Home appliances and electronics like AC, refrigerator, washing machine, and TV.
- No change in GST rates for smartphones and laptops.
- Complete GST exemption on stationery products like books, pencils, erasers, and more.
- Major GST reduction on petrol and diesel-powered cars, bikes, and other automobiles.
- No change in GST for electric vehicles.
While large appliances like AC, washing machine, etc are set to get cheaper, there is no change in GST for smartphones and laptops as they will continue to get taxed at 18%. The GST reduction on automobiles is also limited to cars below 1200cc and 4000cm length, and bikes below 350cc. Any vehicle beyond these limits will attract a higher GST.
| Product Category | Old GST Rate | New GST Rate |
| Daily essentials | 18% | 5% |
| Packaged food | 12% | 5% |
| Healthcare | 18% | 5% |
| Life and medical insurance | 18% | 0% |
| Stationery | 12% | 0% |
| Farming equipments | 12% | 5% |
| Automobiles | 28% | 18% |
| Home Appliances | 28% | 18% |
New Anti-Profiteering Clause
The motive behind reducing the GST rates is to boost consumption in the economy by making goods more affordable. However, companies may not pass on these discounts to the customer, and instead increase the prices of the goods, equivalent to the GST difference. This would result in the customer paying the same price, while the business gains higher profits.
To prevent this, the Government of India has introduced a new Anti-Profiteering Clause with the new GST rates. This rule forces all businesses to strictly reduce the prices of respective goods and services, and pass on the discounts to the customers. Violating this clause will result in legal action and heavy penalties from the government.
The anti-profiteering clause safeguards the Indian customer from possible profit milking by corporate companies. Hence, if the GST on a specific product has been reduced by 10%, the customer will see a direct 10% discount in the price of that product in the market.
List of Products That Will Get Expensive
The Government of India has introduced a new 40% GST slab for luxury, sin goods, and select other products. Such items are set to get more costly. However, the government has removed the concept of CESS. Hence, even with a higher GST rate, the prices of such goods may not increase that much, since CESS has been removed. However, you can expect a minor price hike on the following products:
- Sin goods such as cigarettes, tobacco, pan masala, gutkha, etc.
- Sugared and caffeinated drinks, sodas, energy drinks, and other high-sugar beverages.
- Luxury cars above 4000cm, and engine capacity exceeding 1500cc, along with bikes over 350cc.
- Clothes and apparel priced above Rs 2,500.
| Product Category | Old GST Rate | New GST Rate |
| Cigarette, tobacco, gutkha, pan masala | 28% + CESS | 40% (no CESS) |
| High-sugar beverages | 28% | 40% |
| Luxury cars above 1500cc engine and 4000 cm length | 28% + CESS | 40 % (no CESS) |
| Motorcyles above 350cc engine | 28% + CESS | 40% (no CESS) |
| Clothes above Rs 2,500 | 12% | 18% |
| Ticketing events like concerts, IPL, etc | 28% | 40% |
Why No Change in GST Rate for Smartphones and Laptops
Many people are wondering why the GST rates of smartphones and laptops have remained the same, while we are getting lower prices for home appliances like TV, refrigerator, washing machine, etc. The answer is simple and straightforward.
Smartphones and laptops have an 18% GST, whereas home appliances attract a 28% GST under the old rules. Since the Government of India has scrapped the 28% GST slab, home appliances have received a tax relief under the 18% GST slab. Since phones and laptops were already in the same slab, there is no change in GST rate for them.
Hence, you won’t see any major price difference in smartphones or laptops. However, you can still wait for the upcoming Flipkart Big Billion Days and the Amazon Great Indian Festival to get some discounts.
FAQs
Q. Will petrol get cheaper with new GST rates?
Petrol and diesel do not come under GST, as they are taxed by VAT by the respective state governments. Hence, the new GST rates will not affect the price of petrol in India.
Q. Will smartphones get cheaper with new GST?
Smartphones will continue to attract 18% GST as earlier under the new rules. Hence, there will not be any change in phone prices.
Q. What is the GST on vehicle insurance?
Under the new rules, vehicle insurance will continue to attract an 18% GST. The tax exemption is only applicable on health and life insurance.
Wrapping Up
The reduction in GST on daily essentials, home appliances, insurance, automobiles, farming equipment, stationery, and many other items will significantly reduce the prices of commodities in India. This will boost the consumption in the country, driving more revenue in the economy. It is also expected to bring additional positive effects like new job opportunities, reduced cost of living, bring inflation under control, and more.
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