Daily Briefing: Decoding the GST reset

On that note, we move on to the rest of today’s edition. 👇

🚨 Big Story

We talked about the changes to the Goods and Services Tax (GST) in yesterday’s edition. To quickly recap, the government has introduced a two-slab structure (5% and 18%), alongside a 40% “demerit” charge on super-luxury, sin, and demerit goods, such as tobacco products and aerated, sugary beverages. How will the GST reform impact you? Let’s take a look.

👉 The government hopes to catalyse a behavioural change with the rate rationalising exercise, along with driving up consumption. The GST tweaks are essentially a push towards the consumption of higher-quality or upgraded products. For example, ultra-high-temperature milk (used in baking), Indian breads (from pizza bread to khakra and roti), and packaged items (from namkeen to preserved meat) now attract lower or no tax. GST on smaller cars, air conditioners, and televisions has also been cut from 28% to 18%, which could boost sales, especially before the festive season. Aanchal Magazine and Anil Sasi analyse the rest of the changes.

👉 Upper-mid and mid-segment hotel accommodation has been made cheaper, which could spur domestic travel. However, the scrapping of input tax credits (ITC) has disappointed some in the hotel industry. ITC allows businesses to claim back tax on business purchases from the tax they owe the government. Meanwhile, economy class tickets continue to attract a 5% GST, but the premium class fares will now fetch a higher 18% charge from the current 12%.

👉 The government has also scrapped the tax on premiums for term and health insurance policies for individuals, making them more accessible. However, group insurance plans, such as your employer-sponsored health or life schemes, will continue to attract an 18% GST.

👉 Economists have said that the tax reforms could boost India’s GDP growth by 60 basis points (bps) over 12 months. Lower prices and higher purchases may also ease inflation by 100 bps.

🎧 For more on the GST reforms, tune in to today’s ‘3 Things’ podcast episode.

⚡Only in Express

How will the US-imposed 50% tariff on Indian exports impact the Indian economy? We posed the question to Chief Economic Advisor V Anantha Nageswaran at the recent Express Adda. The CEA warned that the tariffs will make business conditions extremely challenging and, consequently, impact economic growth. However, he expressed confidence that the tariff measure will be “short-lived” and that the boost in consumption from GST reforms may offset the impact from export losses. Read on.

Meanwhile, for this week’s Dis/Agree column, we asked two experts to weigh in on New Delhi’s next steps amid strained India-US ties.

Sumit Ganguly, a senior fellow at Stanford University’s Hoover Institution, writes that India must not abandon the partnership, given the historicity of the ties and viable trade relationship. He argues that policymakers should forge a strategy that “does not involve an inordinate reliance on China and Russia“.

Michael Kugelman, a Washington DC-based South Asia analyst, writes that India has the “luxury” of waiting out the US-India crisis and repairing the relationship when the timing is right. Making a case for the “long game”, Kugelman insists that it is wise to recalibrate ties with China and Russia.

📰 From the Front Page

Hard won: Days ahead of Prime Minister Narendra Modi’s likely visit to Manipur, the Centre claimed a major win with Kuki civil society groups agreeing to allow free movement in the state. However, they face another hurdle in the state, which could turn into a potential law-and-order situation. The issue stems from the “Trade Embargo” announced by the United Naga Council (UNC), starting September 8, which could impact the movement of essential items in the state as the NH-2 passes through Naga-dominated areas.

Arm up: The Ministry of Defence is busy formulating policy changes to expand and streamline critical military acquisition for the Indian Armed Forces. As part of this, defence procurements via the emergency route will have to be compulsorily delivered within a year of signing the contract, failing which the contract will be cancelled.

Breach: As the overflowing Ravi river ravages through Punjab, it washed away nearly 30 km of the iron fencing along the Indo-Pak frontier, forcing the Border Security Force (BSF) to abandon dozens of checkposts, and leaving the zero line between the two countries exposed.

📌 Must Read

Border rulebook: A new set of Rules and Order under the Immigration and Foreigners Act, 2025, came into effect on September 1. They redefine India’s system for regulating the entry, stay and exit of foreign nationals. They also make exemptions for certain classes of foreigners, such as Tibetan refugees or minority refugees from Pakistan, Afghanistan or Bangladesh. Read in detail here.

⏳ And Finally…

Game on: Battleground Mobile India Challengers Series (BGCS) is one of India’s biggest offline esports tournaments, and as cut-throat as any mainstream sport. For 25-year-old Sanaujam Tirisha Chanu, however, the battle goes beyond the screen. Despite the lack of good connectivity — high-speed Wi-Fi access reached her village in Manipur just last year — Chanu has emerged as the top woman esports gamer in the country. She put Manipur, a state already known for its women Olympic medallists, on the esports map. Read her story.

That’s all for today, folks! Happy weekend-ing!
Sonal Gupta

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