India’s government has announced a significant hike in Goods and Services Tax (GST) rates, effective from 1st October 2026. The move is expected to bring in additional revenue for the government, but critics argue that it will put an additional burden on citizens and small businesses. The GST council has increased the tax rate on various goods and services, including luxury items, to 28% from the existing 18%. The government has also reduced the tax rate on essential items like food and medicine to 5% from 12%.
The GST rate hike is expected to bring in an additional Rs 1.5 lakh crore to the government’s coffers. The government has stated that the increased revenue will be used to finance various infrastructure projects and social welfare schemes. However, critics argue that the move will lead to higher prices for consumers and make India’s economy less competitive. Small businesses and startups have also expressed concerns about the increased tax burden, which they fear will lead to job losses and reduced economic growth.
The GST council has also introduced a new tax rate of 12% on services like hotel bookings, restaurants, and entertainment. The government has stated that the new tax rate will help to promote digital payments and reduce the tax evasion. However, critics argue that the move will lead to higher prices for consumers and make India’s economy less competitive.