In a major announcement ahead of Diwali, Finance Minister Nirmala Sitharaman unveiled sweeping GST reforms after the GST Council meeting, aimed at easing the tax burden on households, farmers, and businesses.
Highlighting the government’s focus on simplification, Sitharaman said Prime Minister Narendra Modi had set the direction for next-generation reforms in his Independence Day address, and the Council has now approved a rationalized GST structure. States unanimously backed the move.
Key Announcements
Daily-Use Items Get Cheaper
- GST slashed from 18% to 5% on hair oil, shampoo, toothpaste, toilet soap, toothbrushes, and shaving cream.
- Tax reduced from 12% to 5% on butter, ghee, cheese, dairy spreads, packaged snacks, bhujia, utensils, baby feeding bottles, clinical diapers, napkins, and sewing machines.
Relief for Farmers
- GST on tractors, tractor tyres, parts, drip irrigation systems, sprinklers, bio-pesticides, and farm machinery cut to 5%, reducing input costs in agriculture.
Healthcare Sector Boost
- No GST on health and life insurance policies.
- GST reduced to 5% on thermometers, medical oxygen, diagnostic kits, glucometers, test strips, and spectacles.
- 33 life-saving drugs exempted from GST, down from the earlier 12%.
Education Essentials Exempted
Maps, charts, pencils, sharpeners, crayons, notebooks, and erasers are now completely tax-free.
Electronics and Automobiles
- Tax cut from 28% to 18% on air conditioners, televisions above 32 inches, monitors, projectors, and dishwashers.
- Hybrid cars, three-wheelers, motorcycles up to 350cc, and goods carriers will now attract 18% instead of 28%.
Super Luxury Items and Sin Goods
The Centre has imposed a 40% GST rate on select luxury goods, including personal-use aircraft, pan masala, cigarettes, gutkha, chewing tobacco, and sugary aerated drinks.
These reforms will come into effect from September 22, 2025, except for tobacco and related items which remain heavily taxed.
PM Modi’s Statement
Reacting to the decision, Prime Minister Narendra Modi said the reforms mark the beginning of “Next-Generation GST.” He emphasized that the changes will benefit farmers, MSMEs, the middle class, women, and youth, while improving ease of doing business for small traders.
“The Council’s approval of the Centre’s proposal will make everyday life easier for citizens and strengthen the economy,” Modi said in a post on X (formerly Twitter).
Conclusion
The GST overhaul, which includes abolishing the 12% and 28% tax slabs, is being hailed as one of the boldest reforms since GST’s launch in 2017. By lowering rates on essential goods, medicines, and agriculture inputs, the government hopes to curb inflation, reduce compliance hassles, and give relief to both consumers and businesses.