The 56th GST Council meeting, chaired by Finance Minister Nirmala Sitharaman, concluded on September 3, 2025, with significant decisions on GST reforms. Key outcomes include:
GST Slab Rationalization: The council approved a two-tier tax structure with 5% and 18% slabs, eliminating the 12% and 28% slabs. A special 40% slab was introduced for "sin goods" like tobacco and pan masala.
Tax Cuts on Essentials: Various daily-use items, such as hair oil, toilet soap, shampoo, toothbrushes, and bicycles, will attract a 5% GST rate. Items like paneer and Indian bread will be exempt from GST.
Reduced GST on Other Items:
- Cement: GST rate reduced from 28% to 18%
- Small Cars and Motorcycles: GST rate reduced from 28% to 18% for vehicles below 300cc
- Footwear and Apparel: GST rate reduced to 5% for items priced up to ₹2,500
Health and Insurance:
- Life-Saving Drugs: 33 life-saving drugs exempted from GST
- Health Insurance Premiums: Potential reduction in GST rate to boost affordability
- Implementation Date: New GST rates will be effective from September 22, 2025
- Compensation Cess: The cess will remain only on tobacco products until loan repayment is complete.
These reforms aim to simplify the GST structure, reduce tax rates on essential items, and promote economic growth.
