In an effort to increase demand and lessen the possible effects of high US tariffs, India has lowered levies on hundreds of commodities. The consumption tax was formerly divided into four slabs, but on Wednesday, Finance Minister Nirmala Sitharaman said that the Goods and Services Tax (GST) panel has streamlined it into two slabs: 5% and 18%. Sin products, like as cigarettes, will be subject to an additional 40% tax.
Food products, school supplies, and insurance are expected to become more affordable, but fancy automobiles and foreign alcohol will become more expensive. The news caused stock markets to rise. However, experts estimate that the government may lose up to $6 billion in income as a result of the tax cuts. On September 22, during the start of India’s holiday season, the new prices will go into effect. Sales of electronic devices, including air conditioners, televisions, and other home appliances, are booming nationwide at the moment, and lower costs are only likely to increase them.
India’s central bank has started lowering borrowing costs, and the cutbacks follow a $12 billion income tax giveaway that was announced in the budget earlier this year. According to Kotak Securities Managing Director Shripal Shah, the new tax breaks would increase consumption, which accounts for 60% of India’s GDP.
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