In a significant move to simplify India’s indirect taxation system, the 56th meeting of the Goods and Services Tax (GST) Council was held on Wednesday, September 3, under the leadership of Union Finance Minister Nirmala Sitharaman. The Council approved a major overhaul of GST rates, dissolving the previous tax slabs of 12% and 28% and consolidating the framework into just two primary rates: 5% and 18%. Additionally, a new 40% tax rate will be introduced specifically for luxury and sin goods, with the revised structure set to be implemented on September 22, according to government sources.
Finance Minister Sitharaman announced this landmark development, stating, “We’ve reduced the slabs. There shall be only two slabs, and we are also addressing the issues of compensation cess.” This restructuring will benefit around 175 mass-consumption items, including essential goods such as milk, paneer, bread, and snacks, which will see a decrease in prices. Nearly 99% of the items that were previously taxed at 12% will now be subject to a lower GST rate of 5%, while about 90% of the goods that fell under the 28% slab will transition to the 18% rate.
The newly introduced 40% tax rate, often referred to as a “sin tax,” will apply to around a dozen luxury and demerit goods, including tobacco products and paan masala. This reform is viewed by economists and industry experts as one of the most significant tax changes since the GST was implemented in 2017. It is expected to simplify compliance requirements, reduce disputes, and ultimately provide relief to consumers.
Original Source: https://www.indiatodayne.in/national/story/gst-council-approves-major-rate-restructuring-two-tier-system-to-replace-12-per-cent-and-28-per-cent-slabs-1272078-2025-09-03?utm_source=rssfeed
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Publish Date: 2025-09-03 22:33:00
