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.
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.
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.
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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