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GST Slabs Reduced to 5% and 18%, Check Item Lists with New GST Rates

The 56th GST Council Meeting, chaired by Union Finance Minister Smt. Nirmala Sitharaman, in New Delhi, has brought in landmark reforms under the Goods and Services Tax (GST). These changes are in line with the next-generation GST reforms announced by Prime Minister Shri Narendra Modi on 15th August 2025, aimed at creating a simpler, citizen-centric, and business-friendly taxation system.

GST Slabs Reduced to 5% and 18%

One of the most significant outcomes is the rationalisation of GST slabs into a dual-rate structure- a Merit Rate of 5% and a Standard Rate of 18%, with a special de-merit rate of 40% for select goods. This shift from a four-tier structure to a simpler system is expected to provide relief to consumers, encourage ease of doing business, and reduce tax complexities for small traders.

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GST Council’s 56th Meeting: Key Highlights

The Council’s recommendations were designed with a multi-sectoral focus, addressing the needs of the common man, farmers, labour-intensive industries, and key sectors of the economy. Some of the most notable reforms include:

  • Changes in services will take effect from 22nd September 2025. Changes in goods (excluding tobacco and pan masala products) will also be implemented from the same date.
  • GST exemption on all individual life and health insurance policies, making insurance more affordable and increasing coverage across India.
  • Major tax cuts on household essentials such as soaps, shampoos, and toothpaste, which will now attract only 5% GST instead of 18%.
  • GST reduction on food items and agricultural products, lowering the burden on farmers and middle-class households.
  • Healthcare reforms, with tax cuts on medicines, medical devices, and diagnostic equipment.
  • Support for industries such as textiles, fertilizers, renewable energy, and automobiles by correcting inverted duty structures and lowering rates.
  • Operationalisation of GSTAT (Goods and Services Tax Appellate Tribunal) to provide quicker resolution of tax disputes.
  • These reforms collectively mark a decisive step towards what the Prime Minister called a “Simple Tax” regime.

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New GST Rates

The New GST Rates, slab rationalisation to 5% and 18% represent one of the most transformative reforms. By reducing rates on essential goods, healthcare, agriculture, and industries, the government has taken a citizen-first approach while supporting growth in key sectors.

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New GST Rates on Common Household Goods

To ease the burden on families, the Council reduced GST on several household and daily-use products.

Items From To
Hair Oil, Shampoo, Toothpaste, Toilet Soap Bar, Tooth Brushes, Shaving Cream 18% 5%
Butter, Ghee, Cheese & Dairy Spreads 12% 5%
Pre-packaged Namkeens, Bhujia & Mixtures 12% 5%
Utensils 12% 5%
Feeding Bottles, Napkins for Babies & Clinical Diapers 12% 5%
Sewing Machines & Parts 12% 5%

GST Relief for Agriculture and Farmers

Agriculture, a key driver of India’s economy, received special attention with reductions in equipment and inputs:

Items From To
Tractor Tyres & Parts 18% 5%
Tractors 12% 5%
Specified Bio-Pesticides, Micro-Nutrients 12% 5%
Drip Irrigation System & Sprinklers 12% 5%
Agricultural, Horticultural or Forestry Machines for Soil Preparation, Cultivation, Harvesting & Threshing 12% 5%

Healthcare and Medicines at Lower GST

In a historic step, the GST Council approved sweeping reforms for healthcare to make treatments and medicines more affordable:

Items From To
Individual Health & Life Insurance 18% Nil
Thermometer 18% 5%
Medical Grade Oxygen 12% 5%
All Diagnostic Kits & Reagents 12% 5%
Glucometer & Test Strips 12% 5%
Corrective Spectacles 12% 5%

GST Rate Reductions for Automobiles and Transport

The automobile sector, a major employment generator, also witnessed relief through reduced GST rates:

Items From To
Petrol & Petrol Hybrid, LPG. CNG Cars (not exceeding 1200 CC & 4000mm) 28% 18%
Diesel & Diesel Hybrid Cars (not exceeding 1500 CC & 4000mm) 28% 18%
3 Wheeled Vehicles 28% 18%
Motorcycles (350 cc & below) 28% 18%
Motor Vehicles for the transport of goods 28% 18%

GST Exemptions for Education and Essentials

To encourage learning and reduce costs for students and households:

Items From To
Maps, Charts & Globes 12% Nil
Pencils, Sharpeners, Crayons & Pastels 12% Nil
Exercise Books & Notebooks 12% Nil
Eraser 5% Nil

Electronic Items

The government has also reduced the GST rates for household electronic items:

Items From To
Air Conditioners 28% 18%
Television (above 32″) (including LED & LCD TVs) 28% 18%
Monitors & Projectors 28% 18%
Dish Washing Machines 28% 18%

GST Cuts in Industry & Services

These steps will directly boost industries that employ large workforces, particularly MSMEs and labour-intensive sectors.

Items From To
Cement 28% 18%
Handicrafts, marble blocks, and intermediate leather goods 12% 5%
Manmade fibre & yarn 5%
Sulphuric acid, nitric acid, ammonia 18% 5%
Renewable energy devices 12% 5%
Hotel accommodation (≤ ₹7,500 per night) 12% 5%
Gyms, salons, yoga centres, wellness services 18% 5%
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FAQs

What are the new GST slabs approved in the 56th GST Council meeting?

The GST structure has been simplified to a dual-rate system of 5% and 18%, with a special de-merit rate of 40% for select goods like pan masala and tobacco.

From when will the new GST rates be implemented?

The new GST rates will be implemented in a phased manner starting 22nd September 2025 for goods and services.

Which essential items are exempted from GST?

Ultra-High Temperature (UHT) milk, paneer, Indian breads like chapati and paratha, educational items like pencils, notebooks, and certain lifesaving medicines are now NIL rated.

What changes have been made for healthcare under GST?

Individual life and health insurance policies are fully exempted. GST on medicines, medical devices, diagnostic kits, and equipment has been reduced from 12–18% to 5% or NIL.

How has the agriculture sector benefited from the GST reforms?

GST on tractors, tractor parts, drip irrigation systems, sprinklers, and agricultural machinery has been reduced to 5%, lowering costs for farmers.