Page 31 - NIS English 01-15 October, 2025

New GST Reforms of New India | COVER STORY

Automotive sector Cheaper Toys & Handicrafts
to gain momentum The GST rate on handicrafts such as sculptures, statues,

paintings, wooden/metal/cloth dolls, toys, handmade
n The GST rate on small cars, two-wheelers, and paper, paperboard, MMF sewing thread, and yarn will
their sidecars has been reduced from 28% to 18%. now be reduced from 12% to 5%. The inverted duty
Buses, trucks, three-wheelers, and all auto parts structure has also been rectified by reducing the GST
will also be in the 18% GST slab instead of 28%. rate on man-made fibers from 18% to 5% and on
n The 28% GST rate on bio-fuel vehicles with a man-made yarn from 12% to 5%. This will benefit the
capacity of 10 or more passengers (including toy industry in the country and increase sales of local
the driver), CNG or LPG vehicles up to 1200 products compared to cheaper imported toys.
cc, diesel vehicles up to 1500 cc and 4,000 mm BENEFITS: The revised duty
in length, and goods vehicles has been reduced structure for man-made fibers
to 18%.
will improve the competitiveness
n The GST rate on motorcycle parts, car seats, and and exports of the textile
rowing boats has been reduced from 28% to 18%. industry. It will support the
livelihoods of artisans, promote
BENEFITS: Unifying rate to 18% on all auto rural economic development,
parts irrespective of their classification will remove and help preserve India's
classification disputes. The reduced GST on small cultural heritage.
cars and motorcycles will benefit the middle class
and boost manufacturing. Several companies have Hospitality set to grow;
already announced Gyms & Salons now affordable
price reductions.
Vehicle prices are The GST rate for hotels with a room rate
expected to decrease by of up to Rs 7,500 per day has been reduced
Rs 70,000- Rs 75,000 from 12% to 5%. The GST rate on gyms,
to Rs 2-2.25 lakh. It is salons, barbershops, and yoga centers has been
worth noting that the reduced from 18% to 5%. The GST rate on
auto industry directly cinema tickets priced at Rs 100 or less has
and indirectly been reduced from 12% to 5%.
employs BENEFITS: This will reduce
more than costs for consumers, increase
3.5 crore accessibility, and boost the
people. hospitality and wellness sectors.

political consensus, the constitutional amendment was federal governance.
introduced on August 1, 2016. The Rajya Sabha passed Previously, the GST model adopted was keeping
it on August 3, 2016, and the Lok Sabha on August 8, revenue considerations in mind. As a step towards
2016. After obtaining the consent of more than half the adopting a unified tax system, states were asked to
states, the President notified it on September 8, 2016, abolish the CST (Central Sales Tax). In return, the states
paving the way for the implementation of GST in India. were promised compensation for a certain period. The
In essence, Prime Minister Narendra Modi envisioned states complied, yet the assurance of compensation
an India that works together to achieve its economic following the abolition of CST was not honoured. When
goals. The greatest success of the GST today is that the Arun Jaitley took office as the Union Finance Minister
GST Council has proven to be an extremely effective in May 2014, all the states told him that discussions
and influential federal decision-making body. The state on the GST would only proceed after the outstanding
finance ministers have created history in the sphere of CST compensation was paid. The new government, by

October 1-15, 2025 || NEW INDIA SAMACHAR 29