New Delhi, September 3 (Udaipur Kiran): The GST Council, in its 56th meeting, approved the removal of the 12% and 28% tax slabs, simplifying the structure to just two rates — 5% and 18%. Bihar Finance Minister Samrat Choudhary, speaking to the media after the meeting, confirmed that the new rates will come into effect from September 22, 2025. In addition, luxury items will attract 40% GST.
Union Finance Minister Nirmala Sitharaman will soon announce details of all decisions in a press conference. The meeting, initially planned for two days (September 3–4), was concluded in a single day.
GST Council Highlights
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Clothes & Footwear to Get Cheaper: Sources said GST on footwear and apparel priced below ₹2,500 may be cut to 5%.
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Faster Registration for MSMEs & Startups: Registration timelines reduced from 30 days to just 3 days.
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Automatic Refund for Exporters: Exporters will now receive GST refunds automatically.
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Cheaper Health Insurance & Lifesaving Drugs: Council has agreed to cut GST on insurance premiums and certain medicines.
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Automatic Return Filing: A new system for simplified GST return filing was also proposed.
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Higher Tax on Luxury EVs: Electric vehicles priced above ₹20 lakh may face an increased GST rate of 18% (from the current 5%).
Opposition Concerns
Opposition-ruled states demanded protection of state revenues and insisted that tax cuts must benefit consumers, not companies. They sought a clear compensation plan to offset revenue losses.
When GST was rolled out in 2017, the Centre promised to compensate states for five years through a cess on luxury and sin goods. That arrangement ended in June 2022. Now, several states want the revenue from the new 40% luxury tax to be shared with them.
Impact on Consumers
According to official sources, GST rates on nearly 175 items may be reduced, including food ingredients, dry fruits, snacks, ready-to-eat items, jams, ghee, butter, pickles, condiments, tractors, automobiles, electronics, refrigerators and ACs.
If approved, the average GST rate could fall below 10%, compared to the current 11.5%. The move is aimed at boosting festive season demand and sales across multiple sectors.
Bhupendra Singh Chundawat is a seasoned technology journalist with over 22 years of experience in the media industry. He specializes in covering the global technology landscape, with a deep focus on manufacturing trends and the geopolitical impact on tech companies. Currently serving as the Editor at Udaipur Kiran, his insights are shaped by decades of hands-on reporting and editorial leadership in the fast-evolving world of technology.
