"Analysts say the cuts in the Goods and Services Tax is aimed at boosting demand in the wake of 50 percent tariffs on Indian goods. India has announced tax cuts on hundreds of consumer items ranging from soaps to small cars to spur domestic demand in the face of economic headwinds from punishing tariffs imposed by US President Donald Trump. The measures come as the 50 percent US tariffs took effect last month, raising fears of an economic slowdown."
"Sitharaman said a panel, which looked into the GST reforms, approved cuts in consumer items such as toothpaste and shampoo to 5 percent from 18 percent, and on small cars, air conditioners, and televisions to 18 percent from 28 percent. The panel, which is headed by Sitharaman, approved the two-rate structure of 5 percent and 18 percent, instead of the four rates currently."
"The new tax regime makes insurance premiums, including life and health coverage, tax-free. The finance minister insisted the GST cuts were not linked to the tariff turmoil, saying they were part of long-planned reforms. Federal and state governments are estimated to lose 480 billion Indian rupees ($5.49bn) due to the cuts that will be implemented from September 22, the first day of the Hindu festival of Navratri."
India overhauled the Goods and Services Tax, simplifying a complex four-tier system into two slabs of 5 percent and 18 percent and cutting levies across sectors. Cuts include toothpaste and shampoo to 5 percent from 18 percent, and small cars, air conditioners, and televisions to 18 percent from 28 percent. The new regime makes insurance premiums, including life and health coverage, tax-free. The measures will be implemented from September 22 and are expected to boost domestic consumption alongside earlier personal tax cuts. Federal and state governments are estimated to lose 480 billion rupees ($5.49bn) from the changes. The measures follow the imposition of 50 percent US tariffs and aim to counter related economic headwinds.
Read at www.aljazeera.com
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