The Goods and Services Tax (GST) Council has approved wide-ranging reforms that will impact key sectors of the economy, including food, housing, automobiles, agriculture, healthcare, and education. The measures, announced after the 56th meeting of the Council chaired by Union Finance Minister Nirmala Sitharaman, are set to come into effect from Monday, September 22, 2025.
The new framework introduces a simplified two-slab tax structure of 5 per cent and 18 per cent, replacing the earlier four-rate system. This move is aimed at making compliance easier for businesses and reducing costs for the general public. Luxury and sin goods such as tobacco, pan masala, high-end cars, yachts, and aerated drinks will continue to face a higher levy of 40 per cent, along with compensation cess.
As per information made public via government sources, essential goods and daily-use items are among the biggest beneficiaries. Products such as soaps, shampoos, bicycles, and packaged foods will now attract a 5 per cent GST rate, down from the earlier 12 or 18 per cent. Household appliances, including air-conditioners, televisions above 32 inches, and dishwashers, will see rates reduced from 28 per cent to 18 per cent.
The construction sector has also been given relief, with the GST rate on cement being cut from 28 per cent to 18 per cent. Other materials like granite blocks, marble, and sand-lime bricks will move to the 5 per cent bracket. Officials said this change is expected to make homes more affordable and provide a push to infrastructure projects across the country.
Automobiles will see a clear rationalisation of rates, with small cars, two-wheelers up to 350cc, and auto parts shifting from 28 per cent to 18 per cent. Buses, trucks, and three-wheelers will also benefit from the same reduction.
For farmers, tractors will now be taxed at 5 per cent instead of 12 per cent, while harvesters, threshers, sprinklers, and drip irrigation equipment have been brought down to the same slab. Bio-pesticides and natural menthol, too, will now fall under 5 per cent GST.
Healthcare and pharmaceuticals have been a major focus of the reforms. More than 30 life-saving drugs and diagnostic kits will now attract zero GST. Other medicines, including traditional systems like Ayurveda and Unani, will see rates reduced to 5 per cent. Devices such as thermometers, glucometers, and corrective goggles will also move into the lower tax bracket.
As for the Service sector, lower GST on hotel stays, gyms, salons, and yoga services will reduce costs for citizens, improve access to wellness, and give a boost to the hospitality and service industries. Hotel stays up to Rs 7,500/day from 12 per cent to 5 per cent. Gyms, salons, barbers, and yoga GST cut from 18 per cent to 5 per cent.
In the education sector, learning tools such as pencils, crayons, sharpeners, erasers, and exercise books will now be exempt from GST. Geometry boxes and related school supplies will move from 12 per cent to 5 per cent.
The textile and handicraft sectors will also benefit. The inverted duty structure on man-made fibres has been corrected, with rates on yarn and fibres reduced to 5 per cent. Handicraft items like statues, paintings, and traditional toys have also been shifted to the 5 per cent bracket.
The government stated that the reforms are designed to lower prices & increase demand, support MSMEs, enhance the ease of living, widen the tax base, support manufacturing, stimulate revenue growth, sustain economic momentum, and strengthen social protection.
The new framework introduces a simplified two-slab tax structure of 5 per cent and 18 per cent, replacing the earlier four-rate system. This move is aimed at making compliance easier for businesses and reducing costs for the general public. Luxury and sin goods such as tobacco, pan masala, high-end cars, yachts, and aerated drinks will continue to face a higher levy of 40 per cent, along with compensation cess.
As per information made public via government sources, essential goods and daily-use items are among the biggest beneficiaries. Products such as soaps, shampoos, bicycles, and packaged foods will now attract a 5 per cent GST rate, down from the earlier 12 or 18 per cent. Household appliances, including air-conditioners, televisions above 32 inches, and dishwashers, will see rates reduced from 28 per cent to 18 per cent.
The construction sector has also been given relief, with the GST rate on cement being cut from 28 per cent to 18 per cent. Other materials like granite blocks, marble, and sand-lime bricks will move to the 5 per cent bracket. Officials said this change is expected to make homes more affordable and provide a push to infrastructure projects across the country.
Automobiles will see a clear rationalisation of rates, with small cars, two-wheelers up to 350cc, and auto parts shifting from 28 per cent to 18 per cent. Buses, trucks, and three-wheelers will also benefit from the same reduction.
For farmers, tractors will now be taxed at 5 per cent instead of 12 per cent, while harvesters, threshers, sprinklers, and drip irrigation equipment have been brought down to the same slab. Bio-pesticides and natural menthol, too, will now fall under 5 per cent GST.
Healthcare and pharmaceuticals have been a major focus of the reforms. More than 30 life-saving drugs and diagnostic kits will now attract zero GST. Other medicines, including traditional systems like Ayurveda and Unani, will see rates reduced to 5 per cent. Devices such as thermometers, glucometers, and corrective goggles will also move into the lower tax bracket.
As for the Service sector, lower GST on hotel stays, gyms, salons, and yoga services will reduce costs for citizens, improve access to wellness, and give a boost to the hospitality and service industries. Hotel stays up to Rs 7,500/day from 12 per cent to 5 per cent. Gyms, salons, barbers, and yoga GST cut from 18 per cent to 5 per cent.
In the education sector, learning tools such as pencils, crayons, sharpeners, erasers, and exercise books will now be exempt from GST. Geometry boxes and related school supplies will move from 12 per cent to 5 per cent.
The textile and handicraft sectors will also benefit. The inverted duty structure on man-made fibres has been corrected, with rates on yarn and fibres reduced to 5 per cent. Handicraft items like statues, paintings, and traditional toys have also been shifted to the 5 per cent bracket.
The government stated that the reforms are designed to lower prices & increase demand, support MSMEs, enhance the ease of living, widen the tax base, support manufacturing, stimulate revenue growth, sustain economic momentum, and strengthen social protection.
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