The 56th meeting of the GST Council, chaired by Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman, introduced landmark reforms under the vision of “Next-generation GST” announced by Prime Minister Shri Narendra Modi. The recommendations focus on making GST simpler, more citizen-friendly, and supportive of businesses, farmers, and labour-intensive industries.
Major Decisions & Reforms
1. Simplified GST Rate Structure
Transition from the current 4-tier structure to a 2-rate system:
Standard Rate: 18%
Merit Rate: 5%
A special 40% de-merit rate on select goods/services.
2. Relief to Common Man
Daily-use essentials like hair oil, soaps, shampoos, toothbrushes, toothpaste, bicycles, kitchenware, and household articles reduced to 5%.
Food items (packaged namkeens, pasta, noodles, chocolates, coffee, butter, ghee, sauces, cornflakes, preserved meat, etc.) reduced to 5%.
Milk (UHT), paneer, Indian breads (roti, paratha, parotta, etc.) made NIL rated.
3. Insurance for All
Exemption from GST on all individual life and health insurance policies, including reinsurance, to make insurance affordable and enhance coverage.
4. Healthcare Benefits
Lifesaving drugs: 33 items reduced from 12% to NIL, 3 items from 5% to NIL.
All other medicines reduced from 12% to 5%.
Medical equipment, diagnostic kits, bandages, glucometers, and surgical apparatus reduced to 5%.
5. Support to Farmers & Agriculture
Agricultural machinery (tractors, threshers, harvesters, composting machines, etc.) reduced from 12% to 5%.
Fertilizer sector relief: GST on sulphuric acid, nitric acid, ammonia reduced from 18% to 5%.
6. Boost to Labour-Intensive & MSME Sectors
Handicrafts, intermediate leather goods, marble, granite blocks reduced to 5%.
Correction of inverted duty structure in textiles:
Manmade fibre reduced from 18% to 5%
Manmade yarn reduced from 12% to 5%
7. Infrastructure & Housing
Cement reduced from 28% to 18%.
8. Auto & Transport Sector
Small cars, motorcycles (≤350cc), buses, trucks, ambulances – reduced from 28% to 18%.
All auto parts to attract a uniform 18% rate.
Three-wheelers reduced from 28% to 18%.
9. Renewable Energy & Hospitality
Renewable energy devices: 12% → 5%.
Hotel accommodation ≤ ₹7,500 per day: 12% → NIL.
10. Services for Citizens
Common man services like gyms, salons, barbers, and yoga centres reduced from 18% to 5%.
Institutional & Procedural Reforms
Operationalisation of Goods and Services Tax Appellate Tribunal (GSTAT):
Appeals to be accepted by September 2025.
Hearings to commence by December 2025.
New service rates effective from 22nd September 2025.