The 56th GST Council meeting chaired by the Union Finance Minister has announced major tax reforms, offering long-awaited relief to consumers and traders across the Andaman and Nicobar Islands. The changes, which include slashing the GST rate on cement and rationalizing slabs for several categories of goods, are being seen as a significant step toward easing the financial strain faced by island residents due to high transportation costs and inflated commodity prices.
Since the introduction of the Goods and Services Tax in 2017, islanders have faced some of the steepest costs in the country. The geographical isolation of the archipelago, coupled with dependency on sea and air routes, has meant that every essential commodity, ranging from cement and construction material to food items, must be shipped from the mainland. These shipments often involve reshipment to remote islands, multiplying costs by the time goods arrive at their destination. As GST is calculated on the final landed price, consumers in the islands end up paying significantly higher taxes than their mainland counterparts.
The case of cement highlights the problem. A bag that costs around ₹250 at the manufacturer’s end in mainland India falls into the highest GST slab of 28%. By the time it reaches Andaman shores, however, freight and handling costs add another ₹170-₹250, raising the landed price dramatically. On this inflated price, GST alone adds ₹120-₹140 per bag for local buyers, while customers in mainland India typically pay only ₹50-₹80 as tax. The GST Council’s decision to reduce the tax slab on cement to 18% is expected to save about ₹50 per bag for island households, providing much-needed support to families who aspire to build permanent homes.
The council’s reforms go beyond cement. By rationalizing the 28% slab and bringing many items previously taxed at 12% into the 5% category, the council has extended relief across a broader basket of goods. The exemption or reduction of GST on several daily-use essentials to just 5% has been described as historic in its scale and scope, with potential to benefit the island’s middle class and economically weaker sections who often struggle with inflated costs of living.
The Andaman Nicobar Chamber of Commerce and Industry (ANCCI), which has consistently highlighted the unique challenges faced by the islands under the GST regime, welcomed the move. The chamber pointed out that the structural disadvantage of the islands, where high transport costs and dealer margins accumulate before GST is even applied, has long left residents bearing a disproportionately heavy tax burden. The latest decisions, according to the chamber, signal recognition of these difficulties at the highest policymaking level.
For the islands’ business community, the reforms are expected to ease trade by reducing costs for both suppliers and end-users. By lowering GST slabs and widening exemptions, the council has also streamlined compliance, making trade more efficient. Traders believe the ripple effect of reduced costs will stimulate construction, local business activity, and demand in multiple sectors, contributing to inclusive growth.
The financial relief for the middle class and lower-income groups is likely to be the most immediate and visible outcome. With housing materials such as cement becoming more affordable, families may find it easier to build durable homes. Likewise, the lowering of GST on everyday essentials is expected to ease monthly household budgets across the islands.
The GST reforms are being described as both bold and timely, coming at a juncture when rising transport costs and inflationary pressures have tested the resilience of consumers. For the people of Andaman and Nicobar Islands, the council’s decisions offer a sense of parity with the mainland, narrowing the gap in commodity prices and ensuring that tax relief translates directly into tangible benefits.
