GST Council approves 2-tier tax structure of 5% and 18%
What's the story
The Goods and Services Tax (GST) Council has approved a two-tier rate structure of 5 and 18%, abolishing the 12% and 28% rates. It also approved a new slab of 40% for Sin and luxury goods. The decision was taken at the 56th GST Council meeting chaired by Finance Minister Nirmala Sitharaman. The new structure will come into effect from September 22.
Price changes
Consumer durables and everyday essentials to become cheaper
The new GST structure will make consumer durables such as air conditioners, televisions, refrigerators, and washing machines cheaper. Everyday essentials like ghee, nuts, water (natural, mineral, aerated, not sweetened/flavored), namkeen, footwear, and medicines have also been moved to lower tax brackets. However, cotton quilts and quilted textile products priced above ₹2,500 per piece will become costlier under the new regime.
FM
'Reforms carried out with a focus on the common man'
After the 56th GST Council meeting, Sitharaman said, "These reforms have been carried out with a focus on the common man. Every tax on the common man's daily use items has gone through a rigorous review, and in most cases the rates have come down drastically. "Labor-intensive industries have been given a good support. Farmers and the agriculture sector, as well as the health sector, will benefit. Key drivers of the economy will be given prominence."
Products
Items on which GST has been reduced to 5%
According to the FM, items on which GST has been reduced to 5% are hair oil, toilet soap, soap bars, shampoos, toothbrushes, toothpaste, bicycles, tableware, kitchenware, and other household articles. Items on which GST has been reduced to zero from 5% include ultra-high-temperature milk, chena and paneer. All Indian breads will also see a nil rate; hence, roti or paratha or whatever it is will all come to nil.
Others
ACs, TVs cheaper
Meanwhile, products that will see a reduction from 28 % to 18% are air conditioners, TVs that are over 32 inches, dishwashing machines, small cars, and motorcycles equal to or less than 350 cc. The council has also exempted health insurance from GST, lowering the burden from the previous 18%.
Twitter Post
Check out the rate here
Hon’ble Prime Minister Shri @narendramodi announced the Next-Generation GST Reforms in his Independence Day address from the ramparts of Red Fort.
— Nirmala Sitharaman Office (@nsitharamanoffc) September 3, 2025
Working on the same principle, the GST Council has approved significant reforms today.
These reforms have a multi-sectoral and… pic.twitter.com/NzvvVScKCF