Latest GST Overhaul in India — What You Need to Know
1. Major Simplification: GST Slabs Reduced to Two
The 56th GST Council has revamped the previous four-tier structure into just two primary slabs—5% and 18%—with a special 40% rate retained only for “sin goods” and luxury items. This sweeping change aims to simplify compliance and benefit households and businesses alike.
2. Tax Relief on Daily Essentials
Essential commodities including milk, paneer, roti, certain life-saving medicines, snacks, coffee, chocolates, and butter are now either GST-free or taxed at 5%, easing everyday costs for consumers.
3. Boost for Consumer Goods & Transportation
Goods such as air conditioners, TVs, cement, small vehicles, auto parts, and public transport vehicles now fall under the 18% tax bracket—down from prior higher rates—boosting affordability and demand.
4. Economic Ripple Effects
These reforms are expected to lower inflation by up to 1.1 percentage points and spur consumption, enhancing GDP growth. The stock markets responded positively, with gains in auto and consumer goods sectors.
5. Implementation Date
All changes take effect from 22 September 2025, aligning with the start of Navratri festival.
