Union Minister for Finance and Corporate Affairs, Nirmala Sitharaman chairs the 56th meeting of the GST Council, in New Delhi on Wednesday
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ANI
The GST Council on Wednesday approved a dual tax structure of 5 per cent and 18 per cent, removing the slabs of 12 per cent and 28 per cent.
Finance Minister Nirmala Sitharaman, who chaired the meeting, said: “These reforms are not just rate revision but structural reforms. The intention is to ease of living. There should be just two slabs. These reforms have been carried on keeping in mind the common man.”
“We are all together for the sake of common man,” the FM said, referring to the Council’s uniform intent.
New rates are expected to be implemented from September 22. Some states’ demand to be compensated for the revenue loss owing to the rate cut was not approved.
As endorsed by a Group of Ministers and fine-turned by the Committee of Centre and State officials, the Centre’s proposal to reduce the 4 basic slabs (5, 12, 18 and 28 per cent) to two (5 and 18 per cent) was deliberated upon by the GST Council.
A proposal to bring a new rate of 40 per cent for 5-7 goods, while maintaining special rates of 0, 0.25, 1 and 3 per cent was also approved by the Council.
The Council also approved exemption of health insurance premiums from GST for senior citizens and slashed rates for life saving drugs.
Key essential items such as toothpaste, hair oil, soaps, etc, have been brought in the 5 per cent slab. For readymade garments and footwear, there are two categories based on MRP.
Garments priced below ₹2,500 will continue to attract 5 per cent. The same will be applicable for some categories where the rate is 12 per cent.
However, garments above a sale value of ₹2,500 will be placed in the 18 per cent slab in place of 12 per cent. In terms of footwear, goods with a sale value below ₹2,500 were brought under 5 per cent from 12 per cent, while products with a sale value of over ₹2,500 will continue to attract 18 per cent.
Another proposal related to lowering the rates to 18 per cent from 28 per cent on Air Conditioning Machines, Dish Washing Machines and TV sets (LCD and LED) was approved.
For automobile sectors, cars (petrol, LPG or CNG, length up to 4 meters and engine with capacity below 1200 cc) and car (diesel driven with length of 4 meters and engine capacity of 1500 cc) were brought under the rate of 18 per cent as against 28 per cent.
A key proposal about hiking the rate on some services to 40 per cent (with ITC) from 28 per cent was approved. These include admission to casinos, race clubs, sporting events such as IPL, race club services besides betting, casinos, gambling, horse-racing and lottery.
The Council also took up a proposal to raise GST rate to 40 per cent from 28 per cent plus compensation cess for station wagons, racing cars, motor vehicles of more than 1,200 CC and 4,000 mm length, aircraft, helicopters, aeroplanes for personal use and motor cycles with more than 350CC.
Published on September 3, 2025
