THE government will cut taxes on hundreds of consumer goods ranging from air conditioners to small cars to bolster local consumption, its government said, as New Delhi moves to cushion its economy from the blow of steep US import tariffs.
The announcement comes after US President Donald Trump introduced new tariffs last month that threaten a chunk of New Delhi’s outbound shipments to its world’s biggest market.
Finance Minister Nirmala Sitharaman told a news conference late Wednesday that the reduced goods and services tax, or consumption tax, have been approved by an all-powerful government panel.
They will take effect on Sept 22, the first day of a major Hindu festival that precedes the festival of lights, Deepavali, in October.
The government’s latest overhaul cuts the consumption tax tiers to a two-rate structure of 5% and 18% instead of the previous four tiers of 5%, 12%, 18% and 28%, according to the finance ministry.
A majority of the goods will attract lower taxes, though a special rate of 40% is proposed on a select few items such as high-end cars, tobacco and cigarettes. No tax would apply on purchases of life and health insurance.
Reducing the taxes is a part of Indian Prime Minister Narendra Modi’s broader plan to insulate the economy from the shock of US tariffs, expected to hit an estimated US$48.2bil (RM203.7bil) worth of Indian exports.
“The wide-ranging reforms will improve lives of our citizens and ensure ease of doing business for all, especially small traders and businesses,” Modi said in a post on the social platform X.
Trump last month imposed an additional 25% tariff on Indian goods in response to its unabated purchase of Russian oil, bringing the total tariffs to 50% and straining ties between the world’s two biggest democracies. — AP
