Winning Bizness Desk
Mumbai.Old stock of everyday items like biscuits, toothpaste, chocolates, coffee, shampoo, and soap will now be available at lower prices from September 22. The Union government has allowed manufacturers, packers, and importers to revise the maximum retail price (MRP) on unsold goods using stamps, stickers, or online printing methods. This step has been taken to ensure consumers get the benefit of the reduced Goods and Services Tax (GST) rates announced recently.
Permission for revising MRP on unsold stock
The Consumer Affairs Department issued an order on Tuesday allowing the revision of MRP on old stock. The permission will remain valid till December 31, 2025, or until the stock is cleared, whichever comes earlier. However, companies must ensure that both the new and old MRPs are visible on the packaging. This move comes as a relief for companies that were struggling to adjust old stock with pre-printed higher MRPs after GST rates were reduced.
GST Council’s recent decision on tax cuts
On September 3, the GST Council in its 56th meeting announced significant changes to the tax structure. Several items of daily use will now come under reduced tax rates, offering scope for companies to cut retail prices. The biggest change is the restructuring of GST slabs. Instead of four slabs, there will now be only two—5 percent and 18 percent. This has opened the way for cheaper consumer goods ranging from food products to personal care items, as well as some larger goods like air conditioners and cars.
Everyday items to become more affordable
With the new GST rates, basic household goods will become more affordable for common people. Milk, bread, parathas, and paneer are now completely tax-free. Similarly, personal and family health insurance as well as life insurance have been exempted from GST, reducing financial burden on households. In addition, 33 life-saving medicines, including those for cancer and other critical illnesses, will be available at zero tax, significantly cutting treatment costs.
Luxury goods and tobacco face higher GST rates
While everyday essentials are set to become cheaper, the GST Council decided to increase tax rates on luxury items and tobacco products. Goods like large cars, motorcycles with engines above 350cc, and luxury services will now be taxed at 40 percent instead of 28 percent. This also applies to products such as high-end tobacco, reflecting the government’s aim to tax luxury and harmful products more heavily while giving relief on essentials.
Hotels and services to impact consumers differently
The changes will also affect services widely used by common people. Hotel room tariffs of Rs 7,500 or less per night will attract only 5 percent GST, down from 12 percent earlier. Health and beauty services such as gyms, salons, barber shops, and yoga centers will also see tax cuts from 18 percent to 5 percent, making them more accessible to the public. On the other hand, entry to casinos, race clubs, and events like the Indian Premier League will now attract a higher GST of 40 percent, up from 28 percent.
Benefits for housing and automobile sectors
Cement, which is widely used in housing construction and repair, will now attract only 18 percent GST instead of 28 percent. This will reduce construction costs for households. Similarly, smaller cars and motorcycles with engine capacity up to 350cc will now fall under the 18 percent tax slab, making them more affordable. Auto parts and three-wheelers will also see reduced tax rates, benefiting consumers and transporters alike.
Impact on consumer spending and savings
These changes are expected to directly reduce the financial burden on the common man. Lower GST on food items, consumer goods, insurance, medicines, and small vehicles will make essentials cheaper, leading to higher household savings. By contrast, higher taxes on luxury items will impact only high-end consumers. The restructuring of slabs to just two categories makes the tax system simpler and more predictable, aiding both businesses and buyers.
Illustration of benefit with example
For instance, a bottle of hair oil earlier priced at Rs 100 attracted 18 percent GST, making its final price Rs 118. With the new rate of 5 percent, the GST will now be only Rs 5, making the bottle cost Rs 105. This means consumers will save Rs 13 on every bottle. Similar price reductions will be seen across a wide range of daily-use items from September 22 onwards, marking a visible change in household budgets.
Summary pointers in a nutshell:
1. Government allows revision of MRP on old stock till December 31, 2025
2. Reduced GST rates to apply on daily goods from September 22
3. GST slabs cut down from four to just two, 5 and 18 percent
4. Essential food items, insurance, and 33 critical medicines now tax-free
5. Luxury items and tobacco products to attract 40 percent GST
6. Hotels, gyms, salons, and yoga services become cheaper with lower GST
7. Cement, small cars, motorcycles, and auto parts now in 18 percent tax slab
