Finance Minister Nirmala Sitharaman on Wednesday announced major Goods and Services Tax (GST) rate cuts, saying that with the two-tier tax rate system approved, the common man will benefit greatly. The GST Council approved the two-tier rate structure of 5% and 18%. The GST rate rationalisation will be implemented from September 22. 

Additionally, certain items like high-end vehicles, tobacco and cigarettes will attract a special 40 per cent rate.

GST rate cuts: Key Highlights

GST exemption for all individual life insurance policies, including term life, ULIP, endowment policies, and their reinsurance to enhance accessibility and coverage for the general public.

Complete GST exemption for individual health insurance policies, encompassing family floater and senior citizen policies, along with their reinsurance to increase affordability and coverage.

Current 4-tier tax structure into a 'Simple Tax' system with two rates: 18% Standard Rate and 5% Merit Rate, plus a 40% special rate for select items.

GST reduction to 5% for everyday items from current 18% or 12%, including toiletries, household goods, bicycles, and kitchenware.

Zero GST on UHT milk, packaged chena, paneer, and Indian breads (Chapati, roti, paratha, parotta).

Lower GST to 5% from 12% or 18% on packaged foods including namkeens, Bhujia, sauces, noodles, chocolates, preserved meats, and dairy products.

GST reduction from 28% to 18% proposed for appliances, including air conditioners, 32-inch TVs, dishwashers, and vehicles under 350cc.

GST decreases to 5% from 12% for agricultural machinery, including tractors, harvesting equipment, and farming tools.

Reduction to 5% GST for labour-intensive products like handicrafts, stone blocks, and leather goods.

GST reductions for cement (28% to 18%), medicines (varying reductions including complete exemption for lifesaving drugs), medical equipment, automotive sector, textiles, fertilisers, renewable energy devices, hospitality services, and wellness services.