GST Reforms 2025

GST reforms that focus on the relief for common man and a boost for businesses. In the recent reform GST is simplified in to two lower slab structure, 5% and 18%.

In the 56th meeting of the GST Council, chaired by Union Finance Minister Smt. Nirmala Sitharman, on September 3, approved the two slabs of GST structure (5% & 18%) and a special tax of 40%. Indian government gives the festival gift for every Indian, by reducing GST rates on household essentials.

This improves the lives of common man and also promotes the ease of doing business.

On this Independence Day, Prime Minister Narendra Modi address the nation and announced "The government will bring Next-Generation GST reforms, which will bring down tax burden on the common man. It will be a Diwali gift for you.” The reforms, he said, would directly benefit the common man, farmers, MSMEs, women, youth, and middle-class families.

Nearly 70% of India’s GDP is driven by domestic consumption and this GST reform boost the consumption of common man, the major population of India, and this helps the government to achieve milestone of becoming the world’s 3rd largest economy.

Simplified Structure

The latest reforms by Indian Government in GST, removing the earlier 12% and 28% rates and introducing 5% and 18%, which makes taxation more transparent and easier to follow.

Alongside, registration and return filling have also been simplified, faster refunds, reduced compliance cost especially MSMEs and startups.

Relief for different sectors

Food and Household Sector

GST reducing on daily essentials, which leads to direct saving of common man. Rate reduced on different Indian breads, soaps, shampoo, toothpaste, chocolates, coffee, and other packaged food items including AC, television, dish washer.

Healthcare Sector

Individual health and life insurance GST is reduced from 18% to nil, other items such as thermometer, surgical equipment, spectacles veterinary devices are also have rate cut, 33 life saving drugs and diagnostic kits tax reduced from 12% to nil.

Automobiles Sector

Two wheelers (<350cc), small cars, buses, trucks, three wheeler and auto parts tax cut from 28% to 18%, this improves the affordability and lifestyle of common man.

Agriculture Sector

Rate cut in agriculture improves the life of farmers (the backbone of our country). Reduced tax rates of tractors (including tires and parts), machines like harvester, thresher, sprinklers, drip irrigation, horticulture machines all are reduced to 5% tax rate. Bio-pesticide and natural methanol also comes under 5% rate.

Service Sector

Hotel stays, gyms, salon, barbers, and yoga service also see rate cut, all these services are now come under 5% tax slab. This improves the access for wellness and give a boost to hospitality and service industry.

Education Sector

Government also focuses on education sector making it more affordable, by reducing tax rate in notebooks, erasers, pencils, crayons, sharpeners, maps, charts, all such education items are now having nil tax.

40% Tax Slab

One more slab is introduced – 40%, which applicable on luxury and sin goods such as pan masala, tobacco, carbonated drinks and high-end bikes and cars. By introducing this slab Indian Government trying to reduce the consumption of sin goods which makes the health and environment of country better.

 A simple view of recent GST reforms by Indian Government, take a look

All the revised rates and exemption of GST will come into effect from 22nd September 2025, which relief common man, household, farmers and businesses.

Lastly I want to appreciate Indian Government for recent GST reforms and smooth tax structure into two slab 5% and 18%, this boost the economy and also increase the GST collection.