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GST Council slashes rates, eases burden on Indian industries
Industry News- Sep 04,25
The GST Council has announced sweeping reforms, cutting rates on food, medicines, insurance, essentials, and industry goods, while simplifying the tax structure to benefit citizens and businesses.
New Delhi
The 56th meeting of the GST Council, chaired by Union Finance Minister Nirmala Sitharaman, has announced sweeping reforms in India’s indirect tax structure. The Council has approved a simplified two-rate system with a standard rate of 18 per cent and a merit rate of 5 per cent, alongside a special de-merit rate of 40 per cent for select goods and services.
The most notable reliefs include complete exemption of GST on individual life and health insurance policies, significantly boosting affordability and coverage. Essential food items such as UHT milk, paneer, and all Indian breads have been moved to the NIL category, while several packaged foods like noodles, chocolates, sauces, and coffee now attract just 5 per cent GST.
Key consumer items including hair oil, soaps, shampoos, bicycles, and kitchenware have seen reductions to 5 per cent, while cement, TVs, small cars, motorcycles, and air-conditioners have dropped to 18 per cent. To support healthcare, 33 lifesaving medicines are now tax-free, with other medicines reduced to 5 per cent. Medical devices, diagnostic kits, and hospital supplies have also been made cheaper.
The reforms also target agriculture, renewable energy, and labour-intensive industries. Tractors, farming equipment, handicrafts, textiles, and fertilizers will now attract only 5 per cent GST. Hotel stays under Rs 7,500 and services like gyms, salons, and yoga centres will also become more affordable.
Alongside rate rationalisation, the Council approved the operationalisation of the Goods and Services Tax Appellate Tribunal (GSTAT), set to begin hearings by December 2025. These reforms align with Prime Minister Narendra Modi’s “next-generation GST” vision, focusing on easing compliance, boosting affordability, and strengthening India’s economic growth trajectory.
PM Modi welcomes GST Council’s approval of reform proposals
Prime Minister Narendra Modi has welcomed the collective decision of the GST Council, comprising the Union and State governments, to approve the Union Government’s proposals on GST rate cuts and reforms. He noted that the measures would provide significant relief to the common man, farmers, MSMEs, middle-class families, women, and youth.
The Prime Minister posted on X: "During my Independence Day Speech, I had spoken about our intention to bring the Next-Generation reforms in GST. The Union Government had prepared a detailed proposal for broad-based GST rate rationalisation and process reforms, aimed at ease of living for the common man and strengthening the economy. Glad to state that @GST_Council, comprising the Union and the States, has collectively agreed to the proposals submitted by the Union Government on GST rate cuts & reforms, which will benefit the common man, farmers, MSMEs, middle-class, women and youth. The wide ranging reforms will improve lives of our citizens and ensure ease of doing business for all, especially small traders and businesses."
GST Council 2025
India GST reforms
GST rate cuts
insurance tax relief
cheaper medicines
food GST exemption
agriculture GST rates
textile duty correction
GST Tribunal India
consumer tax relief
Prime Minister Narendra Modi
PM Modi
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