GST Council to Meet Sept 3–4 on Two-Slab Reform
The 56th GST Council meeting will be held on September 3 and 4, 2025, in New Delhi. Both sessions will begin at 11 a.m., while a preparatory officers’ meeting is scheduled for September 2.
Proposal for Two Main Slabs
The Centre is expected to present a proposal to reduce the goods and services tax (GST) structure to two primary rates—5% and 18%. The existing 12% and 28% slabs could be eliminated under the plan. A higher 40% levy on “sin goods,” such as tobacco, alcohol, and luxury cars, is also being considered.
Insurance Exemptions Under Review
The agenda will also cover possible exemptions for individual health and life insurance from GST. The government aims to ease the burden on households and make essential coverage more affordable.
Government’s Rationale
The simplified GST system is being positioned as a “Diwali gift” for consumers and businesses. Officials argue that reducing the number of tax rates will make compliance easier, stimulate consumer spending, and strengthen small and medium enterprises.
Concerns Over Revenue
While the reform has drawn support, the Centre has not yet provided a clear estimate of potential revenue losses. Initial calculations suggest the exchequer could face a shortfall of nearly ₹45,000 crore in the current financial year. Policymakers expect higher consumption to offset some of this impact over time.
Industry Reactions
Manufacturers and traders, particularly in industrial hubs like Ludhiana, have welcomed the proposal but urged the government to expedite reforms. Many businesses have delayed purchases in anticipation of lower tax rates, adding to pressure for quick implementation.
