Government Announces Major GST Reform

• 06 Sep 2025

On 3rd September 2025, Finance Minister unveiled a significant reform of the Goods and Services Tax (GST) regime, consolidating the 12% and 18% slabs into a simplified dual-rate structure of 5% and 18%, while retaining a 40% rate for sin goods.

Key Points

• Relief for the Common Man: The finance minister stated that the reforms were designed to ease the tax burden on daily essentials and labour-intensive sectors, providing benefits to farmers, the agriculture sector, and healthcare.
• Daily Essentials at 5%: Items such as hair oil, soap, shampoo, toothbrushes, toothpaste, bicycles, and kitchenware will now attract only 5% GST.
• Exempt Items: Ultra-high temperature milk, paneer, chena, and all Indian breads (including roti and paratha) have been exempted from GST.
• Food Products at 5%: Namkeen, bhujia, sauces, pasta, noodles, chocolates, coffee, cornflakes, butter, and ghee have been moved to the 5% tax category.
• Consumer Durables at 18%: GST on air conditioners, dishwashers, and small cars has been reduced from 28% to 18%, while motorcycles with up to 350 cc engine capacity will also attract 18%.
• Framework Improvements: Inverted duty structures and classification disputes have been resolved, alongside measures to simplify registration, return filing, and refund processes.