GST 2.0: Personal care, electronics and hybrid cars could see up to 10-point tax reduction

Prime Minister Narendra Modi’s planned GST cuts are set to bring relief to consumers and give a boost to sales of everyday goods and electronics ahead of the festive season.

The government is planning to cut the goods and services tax (GST) by at least 10 percentage points on nearly 175 products, ranging from talcum powder, toothpaste, and shampoo to hybrid cars and consumer electronics, Reuters reported, citing two sources familiar with the matter.

Under the proposal, GST on personal care items such as talcum powder, toothpaste, and shampoo could drop from 18% to 5%, a move expected to benefit companies including Hindustan Unilever and Godrej Industries.

As per the report, consumer electronics like air conditioners and televisions may see rates fall from 28% to 18%, giving a timely push ahead of Diwali sales, when brands such as Samsung, LG Electronics, and Sony dominate the market.

Small petrol hybrid cars are also on the list, with GST potentially dropping from 28% to 18%. This is a long-awaited win for manufacturers like Toyota Motor and Maruti Suzuki, who have lobbied for years to reduce taxes on technology they argue is cleaner than conventional petrol cars.

The final list of products and rates will be decided by the GST council, chaired by Union Finance Minister Nirmala Sitharaman, during its September 3-4 meeting.

The proposed overhaul comes after Modi flagged tax reforms during his Independence Day speech on August 15, when he promised cuts on daily-use items but did not provide details.

With inputs from Reuters