GST Council Approves Simplified Tax Slabs
In the 56th GST Council meeting, Finance Minister Nirmala Sitharaman announced a new, simplified Goods and Services Tax structure. The overhaul reduces GST to two main slabs—5% and 18%—alongside a 40% rate for certain high-end or “sin” goods.
Changes Aimed At Simplification And Relief
The restructuring shifts hundreds of items, including everyday essentials like packaged foods, toiletries, and medicines, into the lower 5% bracket. The move is meant to streamline the tax system and ease the financial burden on consumers.
Luxury And Sin Goods Taxed At Higher Rate
Items such as luxury cars, tobacco, and other demerit or sin goods will now attract the highest 40% GST slab. Authorities expect this tier to cover only a small portion of items, about 1%, focused on discouraging harmful consumption.
Revenue And Economic Impact
While the cut may reduce GST collections, officials believe it will boost consumption and help lower inflation by up to 1.1 percentage points. Many businesses—from FMCG to auto manufacturers—stand to benefit from lower rates on key products.
Rollout Date And Oversight
The new GST structure is set to take effect from September 22, 2025. The government will closely monitor implementation, including ensuring that businesses pass on tax benefits to consumers.
