India Plans GST Cuts on Small Cars, Electronics, Consumer Items

India is preparing its largest goods and services tax (GST) reform in nearly a decade, with plans to cut consumption tax by at least 10 percentage points on about 175 products, including shampoos, hybrid cars, consumer electronics, and key export items. Prime Minister Narendra Modi announced the overhaul during his Independence Day speech, aiming to make daily products cheaper and boost domestic consumption amid strained trade relations with the United States. The proposed GST reductions include lowering tax on consumer items like talcum powder, toothpaste, and shampoo from 18% to 5%, and cutting rates on air conditioners and televisions from 28% to 18% ahead of the Diwali shopping season. Small petrol hybrid cars will see a tax cut from 28% to 18%, benefiting manufacturers such as Toyota and Maruti Suzuki. The reform also targets key export sectors like fertilizers, farm machinery, tractors, and textiles to cushion export declines caused by U.S. tariffs, while encouraging self-reliance among Indian manufacturers. The GST council, led by Finance Minister Nirmala Sitharaman and state representatives, is set to finalize the list of items for tax cuts in early September.