Only two GST rates, cuts part of structural reforms: FM Sitharaman
New Delhi, Sep 3, 2025
The GST Council on Wednesday took a decision to reduce the GST rates to just two, 5% and 18%, with many items also moving to a zero tax slab
The GST Council on Wednesday confirmed the simplification of the Goods and Services Tax to two slabs of 5 per cent and 18 per cent. Speaking at a media briefing late in the evening, Union Finance Minister Nirmal Sitharaman said: "Every tax levied on common man's daily use items have gone through a rigorous looking into and in most cases, the rates have come down drastically. Labor intensive industries have been given a good support. Farmers and agriculture as a whole will also benefit by the decisions we have taken today health related also will benefit. So the key drivers of economy have been given a prominence."
She added that the reform was not just about rationalising rates but also about structural reforms and ease of living. "We have corrected inverted duty structure problems, we've resolved classification related issues, and we've ensured that there will be stability and predictability about the GST," Sitharaman said.
Revenue Secretary Arvind Shrivastava added that a net revenue implication of the cuts was only to be is expected. "We have estimated it to be around 48,000 crores. This is on the consumption base of 2324 because that is where we had all the segregated data," he said.
As for so-called sin goods, Sitharaman said existing GST rates and compensation cess would continue on products such as pan masala, gutkha, cigarettes, chewing tobacco products like zarda, and manufactured tobacco and beedi until the loan and interest payment obligations under the compensation cess account are completely discharged.
In a post on social media platform X, Prime Minister Narendra Modi wrote: "Glad to state that @GST_Council, comprising the Union and the States, has collectively agreed to the proposals submitted by the Union Government on GST rate cuts & reforms, which will benefit the common man, farmers, MSMEs, middle-class, women and youth. The wide ranging reforms will improve lives of our citizens and ensure ease of doing business for all, especially small traders and businesses."
[Press Trust of India]
