GST Council Meeting 2025 –India is rolling out GST 2.0 from September 22, 2025, simplifying tax rates into two main slabs and making essentials cheaper for consumers. The Goods and Services Tax (GST) Council meeting, which lasted for about 10 hours on Wednesday, approved next-generation reforms under the nearly 8-year-old indirect tax system. This paves the way for a new two-slab structure of 5% and 18% with a demerit rate of 40% only for super luxury, sin, and demerit goods. The aim of this decision is to lower the tax burden on common people with sweeping rate cuts and a reduction in GST slabs, ease blocked working capital, and facilitate ease of doing business with automated refunds and registration process.
All About The Meeting & Statement Of The Prime Minister
Finance Minister Nirmala Sitharaman said that from September 22 (as the first day of Navratri), all the rate changes will come into force except for tobacco and tobacco-related issues. She chaired this meeting, which was attended by ministers of 31 states and Union Territories. The Prime Minister expressed happiness that the GST council, which represented the Union and the States, has all agreed to the GST rate cuts and reforms that were proposed by the Union Government, according to a statement issued by the PMO. According to the statement, these reformed rates will benefit the common man, middle-class, women, youth, and farmers. It would enhance the lives of citizens and ease doing business, notably for smaller traders and businesses.
What Are Those Goods Whose GST Has Been Reduced?
If you are wondering what those items are whose rates have been deducted, they are Essential food items that will remain tax-free, whilst various everyday food products and beverages will likely see reduced rates from 18 per cent to 5 per cent. This encompasses butter, ghee, dry nuts, boiled candy, jam, condensed milk, sausage, meat, namkeen, fruit jellies, tender coconut water, sugar, and packaged drinking water in a 20-litre size, fruit pulp, juice, milk-based drinks, ice cream, pastries, biscuits, corn flakes, cereals, and sugar candies.
Further, other common-use items that have seen GST reduced from either 12% or 18% to 5% include hair oil, soap bars, shampoos, toothbrushes, toothpaste, bicycles, tableware, kitchenware, and other household articles. Also, let us tell you that GST has also been reduced for some white goods from 28% to 18%, which include air conditioners, television sets, and dishwashing machines. Further, GST will now be an 18% slab for small cars with an engine capacity not exceeding 1200 cc (petrol) and 1500 cc (diesel), and with a length not over 4 metres. Moreover, there is also good news for motorcycle lovers because there is going to be tax relief for motorcycles with an engine capacity of less than 350 cc. Also, all automotive parts will now be taxed at 18 per cent. Additionally, bigger cars will be taxed at 40 per cent, and the GST rate on all electric vehicles will remain unchanged at 5 per cent.
Major Decision
Another momentous decision was the blanket exemption given for life insurance, whether term or life, ULIP or endowment policies for individuals, along with exemptions for health insurance products for individuals, which included family floater plans and plans for senior citizens. Beauty and physical well-being services used by ordinary people will now face a reduced GST of 5 per cent in contrast to 18 per cent currently, such as services offered by gyms, salons, barbers, and yoga centres.
With these reforms, the GST will now rid itself of multiplicity of slabs – 5 per cent, 12 per cent, 18 per cent and 28 per cent – with a broad two-slab structure – a merit rate of 5 per cent and a standard rate of 18 per cent – and an additional special demerit rate of 40 per cent for super luxury, sin and demerit goods such as pan masala, tobacco and cigarettes.