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GoM cuts GST on 20-Litre Water Bottles and Bicycles to 5%, raise rate on shoes, watches and beauty products

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The Group of Ministers (GoM) for GST rate rationalization has announced significant changes to tax rates, reducing the Goods and Services Tax (GST) on 20-litre packaged drinking water bottles, bicycles, and exercise notebooks from 18% to 5%. This adjustment is expected to boost affordability for essential goods.

Conversely, the GoM has proposed an increase in tax rates for high-end wristwatches priced over ₹25,000 and luxury shoes costing over ₹15,000, raising their GST from 18% to 28%. The comprehensive changes recommended by the GoM, chaired by Bihar Deputy Chief Minister Samrat Chaudhary, are anticipated to yield an additional revenue gain of ₹22,000 crore.

The six-member GoM includes prominent ministers such as Suresh Kumar Khanna from Uttar Pradesh, Gajendra Singh from Rajasthan, Krishna Byre Gowda from Karnataka, and K N Balagopal from Kerala. This committee was formed after the average GST rate dipped below the revenue-neutral threshold of 15.3%.

In their recent meeting, the GoM discussed potential tax rate adjustments for over 100 items. Notably, the GST on bicycles costing less than ₹10,000 may also be lowered from 12% to 5%.

Additionally, some items currently in the 18% slab, including hair dryers, hair curlers, and beauty products, could be moved into the 28% bracket. The GST structure currently operates with four tiers: 5%, 12%, 18%, and 28%, with essential items taxed at lower rates and luxury goods subjected to higher rates.

These changes reflect ongoing efforts to fine-tune the GST framework to balance revenue generation and consumer affordability.

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