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 12:48 PM IST
BJP national spokesperson lauds GST reforms, says Modi reminds Congress of its failures
"Congress made India a fragile five economy. The tuth is Gandhi Vadra family is exposed today in front of the people of India! PM Narendra Modi reminds them of their failures, their incompetence and Anti People Approach. GST reform, which no Congress government could get, PM Modi delivered! Congress has expertise in only 1 work: Corruption," National Spokesperson of BJP, Pradeep Bhandari said.
- 4 Sept 2025 12:40 PM IST
GST reforms will increase India's GDP growth rate above 8 pc: CEO of NSE
Ashish Kumar Chauhan, MD & CEO of the National Stock Exchange (NSE), said, "I would like to thank Prime Minister Narendra Modi and the Finance Minister, Nirmala Sitharaman, for this historic decision to bring down the slabs, which has reduced the complexity and also brought down the tax incidence on indirect tax, which is GST...It will certainly increase India's GDP growth rate above 8 % going forward and it is going to affect every sector of the Indian economy...They've also ensured that more money remains in the hands of a common investor or a common consumer or a citizen and that's what is going to give the common citizen the ability to do many more things than they have been able to do till now...This is a historic decision..."
- 4 Sept 2025 12:36 PM IST
GST reforms are a step in the direction of ensuring an Atmanirbhar Bharat: Piyush Goyal
On GST reforms, Union Minister of Commerce and Industry, Piyush Goyal says, "Yesterday's GST reforms are a step in the direction of ensuring an Atmanirbhar Bharat, an India which is self-sufficient, self-reliant, an India whose supply chains are self-reliant, an India that cares for every Indian. 140 crore Indians coming together with the collective resolve to make India, Viksit Bharat by 2047, a developed and prosperous nation where everybody gets opportunity, where everybody becomes a participant of India's inclusive and sustainable growth story... Our country is seeing a sea change in terms of our confidence to take on bigger and greater challenges in the future, India stands strong, India stands united. India has the confidence to weather many situations. We have done that in the past..."
- 4 Sept 2025 12:33 PM IST
Modi has given relief in every sector for the common people of the country: Union Minister Giriraj Singh
On GST reforms, Union Minister Giriraj Singh said, "Finance ministers of Rahul Gandhi and Mamata Banerjee opposed the GST reforms. But for the middle-class people, PM Modi has given relief in every sector for the common people of the country. Bengal is no longer for the common people... All their work is ongoing to turn Bengal into Bangladesh and remain in power on the strength of Muslims."
- 4 Sept 2025 12:22 PM IST
GST reforms mark a strategic and citizen-centric advancement of our tax framework: Chandrababu Naidu
"We welcome the GST reforms with revised slabs across daily essentials, education, healthcare, and agriculture. This pro-poor, growth-oriented decision will benefit all sections of society, from farmers to businesses. As announced by PM Modi Ji on Independence Day, these next-generation GST reforms mark a strategic and citizen-centric advancement of our tax framework, ensuring a better quality of life for every Indian," Andhra Pradesh CM Chandrababu Naidu said.
- 4 Sept 2025 12:15 PM IST
Modi government turned 'One Nation, One Tax' into 'One Nation, 9 Taxes': Kharge
"For nearly a decade, the Indian National Congress has been demanding the simplification of GST. The Modi government turned "One Nation, One Tax" into "One Nation, 9 Taxes." We had also demanded the simplification of GST's complex Compliances, which had severely affected MSMEs and small businesses," Congress President Mallikarjun Kharge said.
"On 28 February 2005, the Congress-UPA government formally announced GST in the Lok Sabha. In 2011, when the then Finance Minister Pranab Mukherjee brought the GST Bill, the BJP opposed it. When Modi Ji was the Chief Minister, he vehemently opposed GST. Today, the same BJP government celebrates record GST Collections. This Modi government had imposed GST on at least 36 items in the agricultural sector," he further added
"It is a good thing that, even if 8 years late, the Modi government's Kumbhakarnian sleep regarding GST has finally awakened, and they have spoken about Rate Rationalisation upon waking. All states should be given Compensation for a period of 5 years, taking 2024-25 as the base year, because a reduction in rates is certain to have an adverse impact on their revenues," Kharge noted.
- 4 Sept 2025 12:08 PM IST
The govt will ensure that the GST relief is passed on to the common people: MoS Pankaj Chaudhary
On GST reforms, Union MoS Finance Pankaj Chaudhary said, "As far as awareness is concerned, you people are the best medium and after that the government will make full efforts to ensure that whatever relief we have given in GST is passed on to the common people, the government is also concerned about that... Somewhere, the rate rationalisation committee was working on this for about a year or two. All the states were also in agreement that the rates should be changed, and work was going on for this for many years. The Government of India gave its proposal, which was passed unanimously by all the members of the GST Council yesterday."
- 4 Sept 2025 12:03 PM IST
The GST reforms would lead to increased consumption of dairy products: Amul MD
On GST reforms, Gujarat Co-operative Milk Marketing Federation, AMUL's MD Jayen Mehta said, "More than 30 different dairy and food product categories that we are associated with have seen a significant decline in the GST rates. We are confident that this would lead to increased consumption of all these important food items of the dairy product category and this will lead to a sustained growth in the incomes and livelihood of millions of milk producers associated with it. We are really thankful for this welcome step, which has come in conjunction with the recent reduction in income tax rates also, which means more money in hands of the consumers and thereby an assured future for millions of milk producers of the country and all the farmers of the country."
- 4 Sept 2025 11:51 AM IST
The GST reforms have revolutionised every sector: Union Minister Sanjay Seth
On GST reforms, Union Minister Sanjay Seth said, "On August 15, the Prime Minister told the country that the biggest Diwali gift would be given to the nation, and the enthusiasm among India's 140 crore citizens today is because a revolution has come in every sector, be it agriculture, education, or the automobile sector. In the health sector, GST has been reduced to zero on health insurance and life insurance. GST has also been reduced to zero on all life-saving drugs and cancer drugs. Salute to the Prime Minister for this unprecedented reform. Its objective is self-reliance; we should use indigenous things...There is no sector that has not benefited from this...".
- 4 Sept 2025 11:36 AM IST
There is still a need to lower GST on many other items: Karnataka Home Minister G Parameshwara
On GST reforms, Karnataka Home Minister G Parameshwara says, "For essential commodities that reach common people, GST should be less or not at all. But even on such items, they had imposed high GST earlier. Now they have reduced it, which shows they have realised the difficulties of common people. The central government has now understood. Our party too, had been demanding this. We welcome the decision to reduce GST. But there is still a need to lower GST on many other items. We should also study how GST is implemented in other parts of the world."
