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 2:06 PM IST
Relief for farmers as GST rates slashed for dairy products, farm equipment, fertilisers
The Goods and Services Tax (GST) Council on Wednesday (September 4) decided to reduce tax rates on several dairy products, fertilisers, biopesticides, and agricultural equipment, providing relief to farmers and consumers ahead of the festive season.
The 56th meeting of the GST Council, chaired by Union Finance Minister Nirmala Sitharaman, approved significant rate cuts for the agriculture and dairy sectors.
The council decided to make Ultra High Temperature (UHT) milk and paneer completely tax-free by reducing the GST from 5 per cent to zero, as per the official statement.
GST on condensed milk, butter, other fats, and cheese has been reduced to 5 per cent from 12 per cent.
- 4 Sept 2025 1:59 PM IST
Significant reductions have been made in GST on cement, food items, insurance: Gujarat Finance Minister
On GST reforms, Kanubhai Desai, Gujarat Finance Minister said, "The Prime Minister had said that people would receive gifts on Diwali... There has been a significant reduction in GST. On cement, food items, insurance, and insurance premiums, reductions have been made in GST on all these. Common people have received many such benefits."
- 4 Sept 2025 1:46 PM IST
GST reform is a move to convert 'aapda' into 'avsar': Director General, Indian Chamber of Commerce
On GST reforms, Rajeev Singh, Director General, Indian Chamber of Commerce, said, "I would say, it's a masterstroke because entire country was worried about the tariffs which have been imposed by the US. There was fear that MSMEs will have to go through pain, there will be loss of jobs, there will be loss of business and it will very adversely impact the Indian economy. PM Modi truly knows how to convert 'aapda' into 'avsar'. I think GST revision of slabs is a move in that direction because this immediately gives liquidity to the businesses, to the common man, to the farmers. It also boosts the demand which will impact the companies and this basically touches everybody, every segment of the Indian economy. So, I would say it's a great move and very timely step by the Govt..."
- 4 Sept 2025 1:28 PM IST
GST reforms have removed life-saving drugs from tax: Morepen Laboratories MD
On GST reforms, Sushil Suri, Chairman and Managing Director of Morepen Laboratories Limited, says, "I think this is a boon for the country, this is a welcome step for the nation...Now we can see that we should tax the luxury and not the lifeline. Lifeline has been removed, all medicines and most of the medical devices have been taken out, and we are at 5%. Most of the cancer drugs have come to zero. So it means life-saving drugs are not taxed. So, you should not tax life...This is in full alignment with PM Modi's vision, particularly health for all. PM Modi's vision is that health should be affordable. Every single rupee saved on medicine goes in the pocket of the consumer..."
- 4 Sept 2025 1:16 PM IST
GSt reforms have given a booster dose to India's 'Swadeshi' campaign: Rajasthan deputy CM
On GST reforms, Bihar Deputy Chief Minister Samrat Choudhary said "...I thank the Prime Minister and the Finance Minister that under their guidance, the entire GST Council has passed it. The concerns of farmers, the common man, and the entire Indian economy have been addressed. The medical sector has been completely exempted from this, whether it is insurance or medicines for serious illnesses... Through this, a booster dose has been given to India's 'Swadeshi' campaign."
- 4 Sept 2025 1:14 PM IST
There should be some tax relaxations for businessmen: President of Ahmedabad Chamber of Commerce
On GST reforms, Jayendra Tanna, President of Ahmedabad Chamber of Commerce Welfare Foundation, says, "...If we consider the government's intention, then this is definitely a very good step. This is a matter of relief for the common citizens as well as small traders... When it comes to businessmen, we had certain expectations from the government that there should be changes in the compliance system and some relaxation in the different threshold limits under which they are responsible for paying taxes... Businessmen from all over the country ask the government for relaxations..."
- 4 Sept 2025 1:10 PM IST
GST reforms will promote small industries: Jitan Ram Manjhi
On GST reforms, Union Minister Jitan Ram Manjhi says, "MSME is so important that it contributes 31% to India's GDP and also contributes 35% to manufacturing. It contributes about 46% to exports. After agriculture, MSME has the largest contribution... The Finance Minister has said that we will promote small industries. The Prime Minister has implemented the Pradhan Mantri Vishwakarma scheme for small industries... MSME is the backbone of the economy..."
- 4 Sept 2025 1:05 PM IST
Modi has given a huge boost to development by reducing the GST rates: Anil Vij
On GST reforms, Haryana Minister Anil Vij said, "Prime Minister Modi has given a huge boost to development by reducing the GST rates. If prices are lower, people will buy more. Employment will increase. Everyone will benefit..."
- 4 Sept 2025 1:03 PM IST
GST reforms have slashed tax rates on 175 products for farmers and the middle class: Uttarakhand CM
On GST reforms, Uttarakhand CM Pushkar Singh Dhami says, "PM Narendra Modi does what he says. On 15th August, from the ramparts of the Red Fort, he had told the countrymen that before Diwali he would present them with gifts...that reforms would be brought in the GST. I thank the PM and express gratitude that he slashed tax rates on 175 products for farmers and the middle class...Prices of a lot of products are going to come down...The benefits of this would come into effect from 22nd September..."
- 4 Sept 2025 12:53 PM IST
GST reforms are transformational in nature, significantly impacting all sectors: Piyush Goyal
On GST reforms, Union Minister of Commerce and Industry, Piyush Goyal says, "Yesterday's reform in indirect taxes, in GST, coming on the back of several initiatives over the last 11 years, is transformational in nature, significantly impacting the pharma sector, significantly impacting so many sectors, right from the farmer until our MSMEs. Every stakeholder in the country, every consumer, stands to benefit. Yesterday's announcements are game changing and will play a very important role in the months and years to come in our journey towards Viksit Bharat 2047. I'd urge you all to resolve that the entire benefit of yesterday's significant concessions and GST given will be passed on to the consumer, we will all ensure that we will buy Indian-made products made by the sweat and toil of our Indian brothers and sisters, made on the soil of India..."
