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Informist, Thursday, Sept. 4, 2025

 

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--Sitharaman:Tobacco items to continue at current GST rates till loan repaid 
--Sitharaman:GST on retail price instead on transaction value of tobacco pdts 
--Sitharaman: GST on retail price instead on transaction value of gutka 
--Sitharaman: GST on retail price instead on transaction value of pan masala 
--Sitharaman: All new GST rates to be effective from Sept 22 
--Sitharaman:Insurance svcs to go to 2-3 different GST slabs 
--Sitharaman: GST on personal life insurance slashed to nil 
--Sitharaman: Mid-sized cars to have 40% GST 
--Sitharaman: Motorcycles exceeding 350 cc, yatcht to attract 40% GST 
--Sitharaman: Aircraft for personal use to attract 40% GST 
--Sitharaman: Aerated drinks, carbonated drinks to have 40% GST 
--Sitharaman: GST rate cut to 5% for renewable energy components 
--Sitharaman: 40% GST will apply to tobacco items, pan masala 
--Sitharaman: Cut GST on man-made yarn to 5% 
--Sitharaman:Decided to fix renewable sector's inverted duty structure issue 
--Sitharaman: Cut GST on man-made fibre to 5% 
--Sitharaman: Decided to fix inverted duty structure issue of fert sector 
--Sitharaman: To have uniform GST on all auto parts at 18% 
--Sitharaman: Cut GST to 18% on buses, trucks, ambulance 
--Sitharaman: Cut GST on 33 life saving drugs, medicines to nil 
--Sitharaman: Cut GST on cement to 18% 
--Sitharaman: Intermediate leather goods under 5% GST 
--Sitharaman: 12 bio pesticides to be under 5% GST 
--Sitharaman: Small cars, motorcyle at, below 350 cc to have 18% GST 
--Sitharaman: Cut GST to 18% on AC, TV over 32 inches 
--Sitharaman: Cut GST to 5% on cornflakes, butter ghee 
--Sitharaman: Cut GST to 5% on namkeen, sauces, chocolates 
--Sitharaman: Cut GST from 5% to nil on ultra high temp milk, indian bread 
--Sitharaman: Cut GST from 5% to nil on paneer 
--Sitharaman: Hair oil, soap bars, bicylce to have 5% GST

 

NEW DELHI – Advancing Prime Minister Narendra Modi's "Diwali gift" to the common man, the GST Council in its 56th meeting here Wednesday decided that the ministerial body will roll out "Navratri gift" in the form of lower goods and services tax and move to a two-slab GST structure from the current four slabs. The council also decided to impose a new and special GST rate of 40% on luxury and sin goods which will help insulate potential revenue shortfall from the GST rate changes.

 

"All this will be effective Sept. 22, 2025, which is the first day of Navratri," Finance Minister Nirmala Sitharaman said after the council's meeting. "The changes in GST rates of all goods except for pan masala, gutkha, cigarettes, chewing tobacco will be implemented from Sept. 22," she added while briefing the media on the decisions taken at the meeting. 

 

The GST Council inter-alia made the recommendations relating to changes in GST tax rates, to provide relief to individuals, common man, aspirational middle class, and measures for facilitation of trade in GST to boost demand in the economy, Sitharaman said.

 

Prime Minister Modi had made headlines with his announcement on Independence Day about the government's "Diwali gift" in the form of lower GST burden. The task was cut out for state and central revenue officers and the Group of Ministers on rate rationalisation. While many believed that delivering on this task within the stipulated deadline was overambitious given GST rate rationalisation exercise has never worked out in such a short timeframe, all the ministers and officials not just delivered but championed the agenda. 

 

The GST Council tried to strike a balance between the overall revenue buoyancy and the political divide with several non-Bharatiya Janata Party-ruled states while working on the Centre's proposal. According to Sitharaman, the prime minister has been batting for GST relief for masses for around eight months. The council decided on complete GST rate reduction in

common-use items and the states agreed to the proposals despite the dent in their revenues from the tax changes, she said. 

 

The finance minister also said that labour-intensive sectors will benefit from the rate changes, including farmers, and agriculture and allied activities sector as wells as the health sector. Beyond rate changes, the GST Council also decided to correct inverted duty structure and classification issues in line with the next-gen reforms agenda. 

 

"The Council in an unprecedented move has worked tirelessly and closed a 2-day agenda in one day, laying down the reforms for GST2.0," said Mahesh Jaising, Partner & Indirect Tax Leader, Deloitte India. "Rate rationalisation, export liberalisation by way of removal of the intermediary provision and ease of doing business - the announcements cuts across all these," Jaising said. "With an effective date of Sept. 22, the industry will have ample time of 20 days to make necessary changes," he added.   

 

Big ticket rate changes decided by the GST Council Wednesday include reducing GST from 28% to 18% on small cars and motorcycles equal to or below 350cc. The council, however, decided to hike GST on big cars and racing cars to 40% from the current 28%. For automobiles sector, the council also decided to cut GST to 18% from 28% on buses, trucks, and ambulance. The council decided on "uniform rate of 18% on all auto parts irrespective of their HS code," Sitharaman said, a move that will help lower input costs. 

 

The Council, in an attempt to boost consumption demand through the GST rate changes, also decided to cut GST to 18% from 28% on air-conditioners, for all televisions, and dishwashing machines. On a host of fast moving consumer goods, the council decided to lower GST burden including on hair oil, shampoo, toothpaste, soap bar, among others. The GST on bicyles has also been lowered to 5% from 12%. 

 

Another key item that saw rate tweak was cement, which will now attract 18% GST from 28?rlier, significantly lowering the input cost for construction. "This will encourage more people to build houses, create assets and contribute to the overall development," Sitharaman said while making the announcement. 

 

For the agriculture sector, the Council decided to cut GST on agricultural goods like tractors, horticultural or forestry machinery for soil preparation or cultivation, harvesting or threshing machinery, including straw or fodder balers, grass or hay mowers, and composting machines to 5% from 12%. It also decided to cut GST on 12 bio-pesticides to 5% from 12?rlier. 

 

Bringing cheer to consumers, the GST Council decided to cut GST on footwear and textiles not exceeding INR 2,500 to 5% from 12?rlier. 

 

Within food items, the Council decided to cut GST on a host of products, including paneer, chocolates, sauces, namkeens, bhujia, and instant noodles. To give relief to healthcare sector, the Council decided to reduce GST from 12% to nil on 33 lifesaving drugs and medicines and from 5% to nil on three lifesaving drugs and medicines used for treatment of cancer, rare diseases and other severe chronic diseases. "There will also be reduction of GST on all other drugs and medicines from 12% to 5%," Sitharaman said. 

 

Another big-ticket rate change that had been on the Council's agenda for long got resolved Wednesday with the states' consensus to slash to nil the 18% GST paid on life and health insurance premium by individuals. "The reduction in price makes room for people to consider higher sum insured," Hanut Mehta, chief executive officer and co-founder at BimaPay Finsur said. "With lower overall premiums, customers may opt for greater coverage, which strengthens protection levels and gradually reduces the existing protection gap in the market," he said. "This shift could benefit both individuals and the broader insurance ecosystem," he added. 

 

While most of the GST rate changes come as a relief, a few items also move to a higher rate of 40% especially as the council decided to discontinue compensation cess once the loans taken in lieu of revenue shortfall are repaid. Motorcycles exceeding 350 cc, yacht, aircraft for personal use, tobacco, pan masala, aerated drinks, carbonated drinks, revolvers and pistols, will all attract 40% GST. 

 

According to Sitharaman, while most GST rate changes will be effective from Sept. 22, the GST change on tobacco products will take effect after the GST compensation cess levy on them is discontinued. The council also decided that GST will be applicable on retail price of tobacco products, pan masala, gutkha, instead of on the transaction value, the finance minister said. 

 

Sitharaman said the council decided to fix the inverted duty structure issues in the renewables' sector and fertiliser sector. For the textile sector as well, the GST Council tried easing the tax burden for masses by correcting long-pending inverted duty structure for the manmade textile sector by reducing GST rate on manmade fibre from 18% to 5% and manmade yarn from 12% to 5%.

 

Below is a table detailing some of the important GST rate changes:

 

Items (12% to 5%)	Old GST rate (in %)	New GST rate (in %)
Condensed milk	12	5
Butter and other fats (i.e. ghee, butter oil, etc.) and oils derived from milk; dairy spreads	12	5
Cheese	12	5
Namkeens, bhujia, mixture, chabena and similar edible preparations ready for consumption form (other than roasted gram), pre-packaged and labelled	12	5
Diabetic foods	12	5
Drinking water packed in 20 litre bottles	12	5
Soya milk drinks	12	5
Beverages containing milk	12	5
Fixed Speed Diesel Engines of power not exceeding 15HP	12	5
Sprinklers; drip irrigation system including laterals; mechanical sprayers	12	5
Agricultural, horticultural or forestry machinery for soil preparation or cultivation; lawn or sports-ground rollers; Parts [8432 90]	12	5
Harvesting or threshing machinery, including straw or fodder balers; grass or hay mowers; parts thereof	12	5
Tractors (except road tractors for semi-trailers of engine capacity more than 1800 cc)	12	5
Tooth powder	12	5
Hand bags and shopping bags, of cotton	12	5
Hand bags and shopping bags, of jute	12	5
Tableware and Kitchenware of wood	12	5
Tableware, kitchenware, other household articles and toilet articles, of porcelain or china	12	5
Tableware, kitchenware, other household articles and toilet articles, other than of porcelain or china	12	5
Brass Kerosene Pressure Stove	12	5
Table, kitchen or other household articles of aluminium utensils	12	5
Bicycles and other cycles (including delivery tricycles), not motorised	12	5
Furniture wholly made of bamboo, cane or rattan	12	5
Items (18% to 5%)	Old GST rate (in %)	New GST rate (in %)
Cocoa butter, fat and oil	18	5
Chocolates and other food preparations containing cocoa	18	5
Ice cream and other edible ice, whether or not containing cocoa	18	5
Thermometers for medical, surgical, dental or veterinary usage	18	5
Talcum powder, Face powder	18	5
Hair oil, shampoo	18	5
Dental floss, toothpaste	18	5
Shaving cream, shaving lotion, aftershave lotion	18	5
Toilet Soap (other than industrial soap) in the form of bars, cakes, moulded pieces or shapes	18	5
Tooth brushes including dental-plate brushes	18	5
Items (28% to 18%)	Old GST rate (in %)	New GST rate (in %)
Air-conditioning machines, comprising a motor-driven fan and elements for changing the temperature and humidity, including those machines in which the humidity cannot be separately regulated	28	18
Dish washing machines	28	18
Television sets	28	18
Road tractors for semi-trailers of engine capacity more than 1800 cc	28	18
Motor vehicles for the transport of ten or more persons, including the driver [other than buses for use in public transport, which exclusively run on Bio-fuels]	28	18
Petrol, Liquefied petroleum gas (LPG) or compressed natural gas (CNG) driven motor vehicles of engine capacity not exceeding 1200cc and of length not exceeding 4000 mm.	28	18
Diesel driven motor vehicles of engine capacity not exceeding 1500 cc and of length not exceeding 4000 mm.	28	18
Motor vehicles cleared as ambulances duly fitted with all the fitments, furniture and accessories necessary for an ambulance from the factory manufacturing such motor vehicles	28	18
Three-wheeled vehicles	28	18
Motor vehicles with both spark-ignition internal combustion reciprocating piston engine and electric motor as motors for propulsion, of engine capacity not exceeding 1200cc and of length not exceeding 4000 mm	28	18
Items (28% to 40%)	Old GST rate (in %)	New GST rate (in %)
All goods [including aerated waters], containing added sugar or other sweetening matter or flavoured	28	40
Caffeinated Beverages	28	40
Carbonated Beverages of Fruit Drink or Carbonated Beverages with Fruit Juice	28	40
Motor vehicles with both spark-ignition internal combustion reciprocating piston engine and electric motor as motors for propulsion, of engine capacity exceeding 1200cc or of length exceeding 4000 mm	28	40
Motor vehicles with both compression-ignition internal combustion piston engine [diesel-or semi diesel] and electric motor as motors for propulsion, of engine capacity exceeding 1500cc or of length exceeding 4000 mm	28	40
Motor cycles of engine capacity exceeding 350 cc	28	40
Aircraft for personal use.	28	40
Yacht and other vessels for pleasure or sports	28	40

 

 

End

 

Reported by Priyasmita Dutta, Sagar Sen and Shubham Rana

Edited by Vandana Hingorani

 

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