GST Council Meeting 2025 | Nirmala Sitharaman’s Two-Slab GST

GST Council Meeting LIVE Updates | 1st April 2025: In a major overhaul of the Goods and Services Tax (GST) system, Finance Minister Nirmala Sitharaman, who is chairing the 56th GST Council meeting, announced a simplified two-slab GST system will be able to be adopted. The two-slab scheme will include two standard rates of 5% and 18% with a special 40% tax on “sin goods”, and it will replace the existing four-slab taxation structure.

The move, which was unanimously adopted by the GST Council, is effective as of September 22, 2025, that date being the first day of Navratri. “This is an important and historic decision,” and a body is it is “aimed at reducing complexities, enhancing compliance and making the system more user-friendly to consumers,” according to Sitharaman.

GST New Slab rates vs Old Slab rates
• Slab Rate of 5% goods : Everyday essential goods including food, medicines, man-made fibre and yarn, agricultural machinery.
• Slab Rate of 18%: Non-essential goods such as most consumer durables, small cars, motorcycles less than 300cc, household appliances, auto parts, and buses.
• Slab Rate of 40% (Sin Goods): Pan masala, cigarettes, gutkha, chewing tobacco, carbonated drinks, luxury cars over 50 lakh, yachts, and aircraft for personal use.

The previous GST slabs of 5%, 12%, 18%, and 28% have now been simplified down to just two main rates. This helps businesses comply with GST and gives better visibility for consumers.

What Gets Cheaper After the New GST Rates?

Relief has come through on several categories of goods from the GST Council meeting:
• Food & Essentials: Now that ultra-high temperature milk, paneer and all Indian breads (roti, chapati, paratha) receive nil GST (previously 12%), many packaged food items like namkeen, bhujiya, sauces, noodles, chocolates, butter and ghee will now move from 12%/18% GST to 5% GST.
• Consumer Goods: Air conditioners, dishwashers and TVs over 32 inches will now have 18% GST (previously 28%). Motorcycles under 300 cc’s and small cars have now shifted categories as well, moving from high tax to lower tax brackets.
• Construction & Housing: Cement is now taxed at 18% GST (previously taxed at 28% GST), which is good news for the housing and infrastructure sector.
• Healthcare: Probably the biggest relief comes from nil GST on life-saving medicines and drugs (previously 12%) and if that were not enough 3 life saving medicines for cancer and chronic diseases will also be completely exempt from GST.
• Eyewear: Spectacles and goggles sold with only 5% GST (previously 28%).

Higher Tax Rate Items (40% “Sin Goods”)

While common goods and essentials had taxes cut, the GST Council has allocated 40% tax to “harmful or luxury” goods, such as:
• Tobacco products, including gutkha, cigarettes, zarda, khaini, etc.
• Aerated drinks, including carbonated and sweetened soft drinks.
• Luxury goods such as high-cost luxury cars (above ₹50 lakh), personal-use aircrafts, helicopters, and yachts.

Sitharaman made clear that GST on tobacco products will be instituted at the retail price, to add transparency and change the way tax is collected and to show a much higher amount of tax is collected.

GST EXEMPTIONS ANNOUNCED

The GST Council meeting LIVE updates had published several exemptions:
• All individual life insurance policies exempt from GST.
• Health insurance policies (individual, family floater, and senior citizen) will now also be full exempt from GST.
• Certain bio-pesticides, and natural menthol will also be charged a lower 5% or nil rate, as well.

Next Steps on GST Council Meeting

On July 22, Finance Minister Nirmala Sitharaman announced that the Council will meet again on September 4, 2025 to finalize procedures for transition to the new GST, emphasizing that the recommendations were not about increases, but about rationalization and simplification to benefit businesses and consumers under goods and services tax (GST).

Conclusion

The 56th GST Council meeting. The importance of the GST Council Meeting presided over by Nirmala Sitharaman two week’s later in relation to GST in India is an incredible event in the history of tax in India. Changing tax ideology of replacing four slabs of 5%, 12%, 18%, and 28% to just two slabs of 5% and 18% with a sin tax of 40%. The overarching goal is to simplify, reduce cost and time, fairness and efficiency across systems with the GST. Reducing the rates on essential goods, healthcare and construction and consumer goods is aiding the common man straight away, while the government is maintaining revenue protection by introducing higher taxation for luxury goods and harmful goods.

For now, we await clarity on the next GST Council meeting as India plans for the rollout on September 22, 2025.