Key Highlights of the 56th GST Council Meeting (3rd September 2025)
The 56th Meeting of the GST Council, chaired by Union Finance Minister Smt. Nirmala Sitharaman in New Delhi approved major next-generation GST reforms aimed at making taxation simpler, reducing costs for the common man, and promoting ease of doing business.
🔑 Major Announcements
- Insurance Relief
- GST is exempted on all individual life insurance (term life, ULIP, endowment) and health insurance (including family floater & senior citizen policies).
- Simplified Tax Structure
- Current 4-tier system rationalized into a 2-rate structure:
- Standard Rate: 18%
- Merit Rate: 5%
- De-merit Rate: 40% (for select goods like tobacco & luxury cars).
- Current 4-tier system rationalized into a 2-rate structure:
- Common Man Items
- GST on daily essentials like hair oil, soap, toothpaste, shampoos, bicycles, and kitchenware has been reduced to 5%.
- Milk, paneer, chapati, paratha, and parotta are now at NIL rate.
- Packaged foods like namkeens, noodles, chocolates, sauces, butter, ghee, and coffee down to 5%.
- Healthcare
- 33 life-saving drugs – GST cut to NIL.
- Other essential medicines and medical devices were reduced to 5%.
- Agriculture & Labour-Intensive Sectors
- GST on tractors, farming equipment, handicrafts, leather goods, marble & granite blocks reduced to 5%.
- Key Industries
- Cement: 28% → 18%
- Textiles & Fertilizers: Inverted duty structure corrected (man-made fibres, yarns, acids cut to 5%).
- Renewable energy devices: 12% → 5%
- Automobiles & Transport
- GST on small cars, motorcycles (≤350cc), buses, trucks, ambulances: 28% → 18%.
- Auto parts uniform at 18%.
- Services
- Hotel accommodation ≤ ₹7,500/day: 12% → 5%.
- Beauty, salon, gyms, yoga centres: 18% → 5%.
- Institutional Reforms
- Goods & Services Tax Appellate Tribunal (GSTAT) to be operational by Sept 2025, hearings from Dec 2025, ensuring faster dispute resolution.
📅 Implementation Timeline
- New GST rates on services: Effective 22nd Sept 2025.
- Revised GST rates on goods (except tobacco & pan masala): From 22nd Sept 2025.
- Tobacco & similar products to continue at existing rates until cess obligations are cleared.
✅ These reforms aim to boost affordability, ease compliance, and support economic growth while ensuring relief for the common man, farmers, and small businesses.
