Centre rolls out new GST regime: Only 5 pc and 18 pc slabs from Sep 22
Almost all personal-use items will see rate cuts as the government looks to boost domestic spending and cushion the economic blow of the US tariffs
From hair oil, milk products, and corn flakes to TVs, and personal health and life insurance policies, GST tax rates on common-use items were slashed after the all-powerful GST Council on Wednesday (September 3) approved a complete overhaul of the tangled Goods and Services Tax (GST) regime.
The GST Council approved a rate overhaul by limiting slabs to 5 per cent and 18 per cent, effective from September 22, the first day of Navaratri.
Almost all personal-use items will see rate cuts as the government looks to boost domestic spending and cushion the economic blow of the US tariffs.
Also Read: Centre rolls out new GST regime: Only 5 pc and 18 pc slabs from Sep 22
Only two slabs now
Briefing reporters after a marathon daylong GST Council meeting, Union Finance Minister Nirmala Sitharaman said all decisions were taken unanimously, with no disagreement with any state.
The panel approved simplifying the goods and services tax (GST) from the current four slabs – 5, 12, 18 and 28 per cent – to a two-rate structure -- 5 and 18 per cent. A special 40 per cent slab is also proposed for a select few items such as high-end cars, tobacco and cigarettes.
The new rates for all products, except gutkha, tobacco and tobacco products and cigarettes, will be effective September 22 -- the first day of Navratri, she said.
Also Read: Diwali comes early: Council slashes GST on everyday items; here is the full list
What will get cheaper?
While daily use food items will continue to attract nil tax rate, common use food and beverages ranging from butter and ghee to dry nuts, condensed milk, sausages and meat, sugar boiled confectionery, jam and fruit jellies, tender coconut water, namkeen, drinking water packed in 20-litre bottles, fruit pulp or fruit juice, beverages containing milk, ice cream, pastry and biscuits, corn flakes and cereals, and sugar confectionery are likely to see a cut in tax rate to 5 per cent from the current 18 per cent.
All forms of chapati and paratha will be charged nil tax, down from the current rate of 5 per cent.
Consumer goods such as tooth powder, feeding bottles, tableware, kitchenware, umbrellas, utensils, bicycles, bamboo furniture and combs will see rate cut from 12 per cent to 5 per cent. The rates on shampoo, talcum powder, toothpaste, toothbrushes, face powder, soap and hair oil has been cut down to 5 per cent from 18 per cent.
Sitharaman said all individual life and health insurance policies will now attract nil tax in a bid to boost coverage.
Cement will cost less with the tax rate coming down from 28 per cent to 18 per cent. Petrol, LPG and CNG vehicles of less than 1,200 cc and not more than 4,000 mm length and diesel vehicles of up to 1,500 cc and 4,000 mm length, too, would move to 18 per cent rate from 28 per cent.
Also Read: Mega GST reforms fuel stock markets rally; Sensex jumps nearly 900 points
Reforms in auto sector
All cars larger than 1,200 cc for petrol and 1,500 cc for diesel will be charged at 40 pc, the finance minister said.
Motorcycles up to 350 cc, consumer electronics like air-conditioners, dishwashers, and TVs, too, will be taxed at lower GST of 18 per cent as against 28 per cent currently.
All automobiles above 1,200 cc and longer than 4,000 mm as well as motorcycles above 350 cc, yachts and aircrafts for personal use, and racing cars will be attract a 40 per cent levy.
EVs will continue to be charged at 5 per cent GST.
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Live Updates
- 4 Sept 2025 4:01 PM IST
GST reforms have completely transformed the Indian economy: Kerala BJP president
On GST reforms, Kerala BJP president Rajeev Chandrasekhar says, "In 2016, when the Parliament passed GST, it was always made clear by our PM that it was an indirect taxation reform that would, over time, transform the Indian economy and lead to lower rates. He was clear that he had a multi-year vision for our country to strengthen our economy and improve our tax compliance, and then, as the tax net grew, the tax rates would moderate. That's exactly what happened today with GST 2.0... Starting from 2016, Rahul Gandhi and his cohorts tried to demonise the GST reforms. They are the ones who called it the 'Gabbar Singh' tax... The reality today, as the last nine years have shown, is that the GST laws and the GST reforms have completely transformed the Indian economy and made it into a single market."
- 4 Sept 2025 3:56 PM IST
GST reforms will create a momentum of growth in the country: FICCI president
Delhi On GST reforms, FICCI president Harsha Vardhan Agarwal said, "It is a landmark step by the government. From the industry perspective, we are very positive and bullish about the step the government has taken. The government is clear that it has to drive consumption forward. It will create a momentum of growth in the country."
- 4 Sept 2025 3:49 PM IST
GST 2.0 explained: What India’s new tax regime means for you
The GST Council has scrapped the four-tier structure in favour of a simplified two-rate regime—5 per cent for essentials and mass-consumption items, and 18 per cent for the majority of goods and services. And there's a 40 per cent “sin/luxury” slab for high-end goods. R Vaitheeswaran, seasoned lawyer, chartered accountant, GST expert and advisor to Tamil Nadu’s government and trade bodies is decoding the impact of GST 2.0 on households, SMEs, and fiscal relations.
- 4 Sept 2025 3:45 PM IST
States should be given compensation, should be brought under Cess: Owaisi
On GST reforms, AIMIM MP Asaduddin Owaisi says, "We are worried that states will be troubled due to this...The states should be given compensation, or they should be brought under Cess...All the rhetoric and dialogue that we have seen in the last 11 years have not helped the common man.."
- 4 Sept 2025 3:42 PM IST
GST reform is for our entire economic ecosystem: Gujarat Minister Rushikesh Patel
On GST reforms, Gujarat Minister Rushikesh Patel said, "PM Modi had made a promise that the Diwali this year will be really good for the people of India, that he is going to present a big gift. Now, GST Council has made a really good decision and for middle-class families, poor families. He first gave a big gift with the tax exemption up to Rs 12 Lakh income. But now, with GST reform for our entire economic ecosystem - no sector has remained untouched...This will vastly benefit people in all sectors..."
- 4 Sept 2025 3:32 PM IST
Jharkhand has suffered losses since the launch of GST: Mahua Majhi
On GST reforms, JMM MP Mahua Maji said, "What benefits and what losses will the common man get from this, that will only be known after assessment. We will be able to say something only after studying it, but somewhere Jharkhand is being harmed by this, as the Finance Minister said that every year there will be a loss of Rs 2 thousand crores because Jharkhand is very rich in minerals, supplies to the entire country, and since the arrival of GST, Jharkhand has suffered losses of thousands of crores, so why did this happen, how did it happen, what benefits will the common man get from this, we will be able to tell only after studying it..."
- 4 Sept 2025 3:29 PM IST
GST reforms will likely boost affordable housing segment: NAREDCO chairman
On GST reforms, National Real Estate Development Council (NAREDCO) Conference Chairman Niranjan Hiranandani says, " The real estate and infrastructure sector is a very big beneficiary and I am especially thankful that the Prime Minister has considered this sector as an important sector....In the last 18 months, affordable housing has seen a decline, and we have seen a reduction of almost 18% in the total number of affordable housing units being constructed nationwide, not just in major cities, but throughout the country. So I think this is going to be one of those steps that is going to make a world of difference to the affordable housing segment in the country".
- 4 Sept 2025 3:21 PM IST
GST reforms focus on essentials, middle class, and fixing inverted duty structures: PM's Economic Advisory Council
On GST reforms, Member of the Prime Minister's Economic Advisory Council (EAC-PM), Sanjeev Sanyal said, "When we introduced the GST in 2017, our main concern was really shifting the overall system onto this new formulation of GST and so what we didn't do at that time was to go back and look at which rate was supposed to be at what level based on some first principles thinking. Basically, we shifted it based on what pre-existed. We decided that the time has come to simply go back, look at the first principles of which rate should be where, and shift it onto that new rate... One of the important things we have looked at is obviously what are essential goods, what the poor use, what the middle classes use, and so on. But also, an important thing is to make sure you don't have inverted duty structures of various kinds..."
- 4 Sept 2025 3:10 PM IST
GST reforms split Opposition States: Kerala protests, Tamil Nadu cautious
The Opposition-ruled states’ reaction to the latest GST rate cuts has been a mixed bag, with Kerala claiming that it will lead to an annual revenue loss of Rs 8,000 crore to Rs 10,000 crore, while Tamil Nadu welcomed the GST reform even as it expressed concern for the protection of the state’s revenue.
However, Trinamool Congress, the ruling party in West Bengal, described the GST reforms as a “victory wrested from a tone-deaf regime”, adding that it was Chief Minister Mamata Banerjee who repeatedly warned the Centre over taxing GST on insurance premiums.
