India’s GST Council is set to discuss a major overhaul of the nation’s indirect tax system—which includes reducing GST on biscuits to 5%. This is part of a broader reform aimed at merging food and textile products into a streamlined two-slab structure (5% and 18%) to simplify taxation and reduce costs for consumers.
Key Highlights of the GST Reform
- Shift to Two Tax Rates: The reform aims to eliminate the 12% and 28% GST slabs, consolidating them into just 5% and 18%. Essential items like biscuits may now be charged at the lower rate.
- Focus on Affordability: This move is expected to boost domestic consumption by lowering prices of daily-use items—including biscuits, snacks, and processed food—which could invigorate the FMCG sector.
- Consumer Behavior Impact: The anticipated tax cuts have already affected consumer sentiment, leading to a temporary slowdown in festive purchases as shoppers wait for lower prices
- Economic Boost Intent: The GST reform could potentially lift GDP by 0.6 percentage points, even though it may strain government revenues.
Why Lowering GST on Biscuits Matters
- High Consumption, High Sensitivity: Biscuits, especially affordable varieties under ₹100 per kg, are staple snacks for lower-income consumers. Lower GST can make them more accessible and curb shifts to unhygienic alternatives
- Historical Industry Push: The biscuit manufacturers’ lobby has long argued for GST reduction to 5% for mass-market biscuits, citing fairness and health concerns.
- Policy Alignment: This targeted reduction aligns with government efforts under the “GST 2.0” initiative—aimed at simplifying tax rates and enhancing affordability across essential goods
At-a-Glance Overview
| Policy Detail | Insight |
|---|---|
| Current GST for Biscuits | 18% uniform rate on both branded and unbranded varieties |
| Proposed GST Rate | 5% — within essential items category under reform |
| Reform Timeline | GST Council meeting scheduled early September 2025 |
| Consumer Impact | Expected drop in biscuit prices, boost to snack demand |
| Economic Effect | Possible GDP growth amid revenue trade-offs |
