India has cut taxes on hundreds of goods to boost consumption and mitigate the potential impact of steep US tariffs.
Finance Minister Nirmala Sitharaman said on Wednesday that the Goods and Services Tax (GST) panel had simplified the consumption tax into two slabs - 5% and 18% - doing away with an earlier four-slab structure. There will be a separate 40% tax on sin goods like cigarettes.
Goods set to become cheaper include food items, school supplies and insurance while imported liquor and premium cars would become costlier.
Stock markets rallied on the announcement. But analysts say the slashed taxes could lead to revenue losses of up to $6bn for the government.
The new rates will come into effect on 22 September, which is around the time India's festive season is set to begin. It's a time when sales of electronic goods such as ACs, TVs and other household appliances shoot up in the country and cheaper prices are expected to boost them further.
