Srinagar, Sept 3 (KNS): The Goods and Services Tax (GST) Council on Wednesday approved a set of sweeping changes in the indirect tax regime, exempting individual life and health insurance policies, cutting rates on a wide basket of goods and services, and pruning the current four-tier structure to two principal slabs.

The decisions, taken at the 56th meeting of the Council, mark the most extensive reform since GST was rolled out in July 2017. The new framework will have a standard rate of 18 per cent and a merit rate of 5 per cent, with a 40 per cent de-merit rate retained for a narrow set of items. Officials said the move was aimed at simplifying the tax architecture and easing compliance.

Prime Minister Narendra Modi, who had first flagged “next-generation GST reforms” in his Independence Day address, welcomed the Council’s decision. “Glad to state that the GST Council, comprising the Union and the States, has collectively agreed to the proposals submitted by the Union Government on GST rate cuts and reforms, which will benefit the common man, farmers, MSMEs, middle-class, women and youth,” he posted on X.

Insurance, healthcare and medicines form the core of the relief package. All individual life and health insurance policies, including ULIPs, endowment plans, family floaters and senior citizen covers, will now be exempt from GST.

Over 30 lifesaving drugs, including cancer and rare disease treatments, will be taxed at nil, while rates on all other medicines will be cut from 12 to 5 per cent.Click Here To Follow Our WhatsApp ChannelMedical equipment such as diagnostic kits, bandages and glucometers will also move into the 5 per cent bracket.

Household consumption goods and food items saw some of the sharpest reductions. Hair oils, soaps, shampoos, toothpaste, bicycles and kitchenware will now attract 5 per cent tax. UHT milk, packaged paneer and all Indian breads chapati, paratha and parotta among them will be exempt. Packaged foods such as noodles, chocolates and sauces will fall to 5 per cent.

Cement, which had long been a high-tax item, will now be taxed at 18 per cent instead of 28. Consumer durables including televisions up to 32 inches, air-conditioners and dishwashers will also move into the 18 per cent slab. Small cars and two-wheelers up to 350cc, along with buses, trucks and ambulances, will shift from 28 per cent to 18.

Agricultural machinery including tractors and threshers will now attract 5 per cent GST, down from 12. Duty corrections were also carried out in manmade textiles and fertilisers, with fibres, yarn and inputs such as sulphuric acid and ammonia reduced to 5 per cent. Renewable energy devices, hotel accommodation priced under ?7,500, and services such as gyms, salons and yoga centres will also move to the 5 per cent bracket.(KNS)