Table of Contents
Summary of Council Decisions
The 56th meeting chaired by the Union Finance Minister approved a sweeping set of changes to simplify GST in line with the Prime Minister's next-generation tax vision. Key outcomes include a dual-rate model of 5% and 18%, sweeping relief for essentials and agriculture, exemptions for selected educational and medical items, and the operationalisation of GSTAT for faster dispute resolution.
New Rate Structure: 5%, 18% & 40%
The GST framework is now centred around two primary slabs: a concessional Merit Rate at 5% and a Standard Rate at 18%. Additionally, a higher de-merit rate of 40% will continue to apply to harmful products like pan masala and select tobacco goods.
Household Goods — Items Moved to 5%
| Item | Old Rate | New Rate |
|---|---|---|
| Hair Oil, Shampoo, Toothpaste, Toilet Soap, Toothbrush, Shaving Cream | 18% | 5% |
| Butter, Ghee, Cheese & Dairy Spreads | 12% | 5% |
| Pre-packaged Namkeens & Mixtures | 12% | 5% |
| Utensils | 12% | 5% |
| Feeding Bottles, Baby Napkins & Clinical Diapers | 12% | 5% |
Agriculture & Farmer Inputs
Essential farm machinery and inputs have been moved to the lower 5% slab to reduce cultivation costs. Items include tractors, tractor tyres, drip irrigation systems, specified bio-pesticides and micro-nutrients.
Healthcare & Medicines
Healthcare received major relief: individual life and health insurance moved to NIL, and several medical devices and diagnostic kits reduced to 5% to improve affordability and access.
Automobiles & Electronics
Certain automobile categories and large household electronics have seen rate cuts to 18% from higher slabs — examples include small petrol and diesel cars, motorcycles up to 350cc, ACs and large TVs.
Education & Exemptions
Items such as pencils, exercise books, maps and charts have been exempted (NIL rate), reducing costs for students and educational institutions.
Implementation & Effective Dates
The Council has said changes will be implemented in phases, with key effective dates starting from 22 September 2025 for many goods and services. Businesses should update GST billing and inventory systems accordingly.
FAQs
Q: What are the new GST slabs approved in the 56th GST Council meeting?
A: The primary slabs are 5% and 18%, with a 40% de-merit rate for select harmful goods and NIL exemptions for specific essentials.
Q: When will the changes come into effect?
A: Phased implementation begins on 22 September 2025 for many items.