GST Reduction on 20-Liter Water Bottles and Bicycles: Group of Ministers Proposes 13% Tax Cut, Shoes and Clocks to Increase by 10%

The government is considering a reduction in the Goods and Services Tax (GST) on bicycles, 20-liter bottles of drinking water, and exercise notebooks for children. Meanwhile, there are plans to increase the tax on onions, clocks, and shoes by 10%.

On Saturday (October 19), a meeting was held by the Group of Ministers (GoM) formed to simplify the GST framework, where these matters were discussed.

Following the meeting, suggestions were presented to modify the taxes on these five products. After the meeting, the chairman of the Group of Ministers, Bihar’s Deputy Chief Minister Samrat Choudhary, stated that the group’s proposals are expected to increase the government’s annual revenue from GST by ₹22,000 crores.

Proposed GST Changes on Selected Goods

• Bicycles: A suggestion to reduce the GST on bicycles priced over ₹10,000 from 12% to 5%.
• Drinking Water Bottles: A proposal to decrease the GST on 20-liter bottles of water from 18% to 5%.
• Exercise Notebooks: A recommendation to lower the GST on exercise notebooks for children from 12% to 5%.
• Wristwatches: A suggestion to increase the GST on Wristwatches priced over ₹25,000 from 18% to 28%.
• Shoes: A proposal to raise the GST on shoes priced over ₹15,000 from 18% to 28%.

Review of Items in the 12% Tax Slab

The meeting reviewed the pricing of items in the 12% tax slab, which includes over 100 items. According to media reports, the group of ministers has only suggested three GST slabs: 5%, 18%, and 28%. In this context, there are considerations to gradually eliminate the 12% slab.

This group of ministers, formed on November 1, 2023, is expected to present its recommendations to the GST Council by the end of this month. Subsequently, the GST Council may consider these recommendations in its meeting scheduled for November.

Government Collects ₹1.75 Lakh Crore in GST Revenue in August

The government collected ₹1,74,962 crore (approximately ₹1.75 lakh crore) in GST revenue in August 2024, reflecting a year-on-year increase of 10%. In comparison, ₹1,59,069 crore was collected in August of the previous year.

During this period, the government collected ₹1.25 lakh crore in tax from domestic businesses, marking a year-on-year growth of 9.2%. Simultaneously, the revenue collected from imports amounted to ₹49,976 crore, representing a 12.1% increase over the year.

The collection for August is the fourth highest recorded for any month to date. For the financial year 2024-25, it ranks as the third-largest GST collection.

In August, the government refunded a total of ₹24,460 crore. After accounting for refunds, the net GST revenue for August stood at ₹1,50,501 crore, which is 6.48% higher compared to August 2023.

GST Council Reduces Tax on Cancer Medicines to 5%

In the recent meeting of the GST Council held on September 9, several important decisions were made concerning the health, education, and food sectors. One significant decision was to reduce the GST on cancer medicines from 12% to 5%. Additionally, it was decided to impose a GST of 12% on snacks instead of the previous rate of 18%.

The Finance Minister stated that the decision to reduce GST on health insurance premiums will now be made in November. Furthermore, it was announced that recognized universities and research centers, both at the central and state levels, will no longer have to pay GST on grants received.

GST Collections Reflect Economic Health

GST collections serve as an indicator of the overall health of the economy. Regarding the GST collection figures for April, Abhishek Jain, the National Head of KPMG, stated that the highest GST collection to date reflects a robust domestic economy.

GST Implemented in 2017

The government implemented the Goods and Services Tax (GST) across the country on July 1, 2017. Following this, 17 central and state taxes, along with 13 cesses, were abolished. As GST marks its seven-year milestone, the Ministry of Finance has shared achievements from the past seven years.

GST is an indirect tax introduced to replace various types of previous indirect taxes, including VAT, service tax, purchase tax, excise duty, and many others. It comprises four tax slabs of 5%, 12%, 18%, and 28%.