The Finance Ministry has issued a detailed explanation of the GST reforms kicking in today. These changes aim to simplify rates, remove anomalies, and benefit both businesses and consumers. The overhaul marks a significant step in streamlining India’s tax structure.
All individual life insurance policies are now exempt from GST. This includes term plans, endowment policies, and ULIPs. Reinsurance of these policies also falls under the exemption.
Individual health insurance policies receive the same benefit. Family floater and senior citizen plans are exempt. Their reinsurance is also covered under this decision.
Passenger transport by road remains at 5% without input tax credit. Operators can opt for 18 percent with ITC. Air travel sees economy class taxed at 5 percent, while other classes stay at 18 percent.
Multimodal transport of goods without air involvement is taxed at 5 percent with limited ITC. If any air transport is included, the rate becomes 18 percent with full ITC.
For local delivery services via e-commerce operators, liability depends on registration. Unregistered providers make the ECO pay GST. Registered providers pay the tax themselves.
Local delivery services face an 18 percent GST rate. This clarifies the tax treatment for countless small deliveries happening daily across the country.
No recall of medicine stock is necessary before September 22. Manufacturers need only issue revised price lists. Existing market stock can be sold with new pricing on bills.
Medicines aren’t fully exempt to maintain input tax credit flow. A 5 percent rate keeps them affordable while allowing manufacturers to claim ITC. This prevents cost increases from being passed to consumers.
Raw cotton stays under GST to preserve the input tax credit chain. Farmers don’t pay directly due to reverse charge. This system benefits the entire textile industry.
Leasing or renting without an operator matches the goods’ tax rate. A car leased without a driver is taxed at 18 percent, same as purchase. This uniformity applies across all goods.
Revised GST rates apply to imported goods as well. IGST on imports will use the new rates from today. Specific exemptions remain as provided.
UHT milk exemption applies only to dairy. Plant-based milk drinks see a unified 5 percent tax. This includes almond, soya, and other varieties.
Face powders and shampoos get rate cuts as common household items. The simplification benefits all brands, avoiding a complicated structure. The goal is administrative ease and broader consumer benefit.
The GST reforms represent a thoughtful evolution of India’s tax system.