GST Council Meeting Today: Major GST Rate Cuts and Key Announcements from September 2025

The 56th GST Council meeting held on 3rd Sept 2025 in New Delhi has discussed a series of important decisions that surely impact businesses, consumers, and the overall economy. Chaired by Finance Minister Nirmala Sitharaman, the meeting focused on GST rate cuts, simplification of tax slabs, and faster compliance processes.

These announcements are being described as the beginning of “GST 2.0” – a move towards making India’s Goods and Services Tax simpler, fairer, and more consumer-friendly.

GST Rate Cuts: What Will Get Cheaper?

One of the biggest highlights of the GST meeting today is the rationalisation of GST slabs. The Council decided to reduce the existing multiple slabs into two standard ones – 5% and 18%, while a 40% slab will now apply to certain “sin goods” like tobacco, pan masala, and luxury cars.

This change will make it easier for both businesses and consumers to understand GST rates. More importantly, many everyday items will now attract lower taxes.

• Household essentials such as soaps, shampoos, toothpaste, butter, cheese, and packaged food items will move to the 5% GST slab instead of 12% or 18%.
• Medical items like oxygen, diagnostic kits, gauze, and several life-saving medicines have also seen a rate reduction, making healthcare more affordable.
• Home appliances and white goods such as TVs, dishwashers, and air conditioners will now be taxed at 18% instead of 28%, giving relief to consumers just before the festive season.
• Automobiles: Small cars (petrol engines up to 1200 cc and diesel up to 1500 cc, under 4 meters in length) will now fall in the 18% bracket, while electric vehicles remain at 5% GST. Larger cars and luxury SUVs will fall in the 40% slab.

Insurance Policies Get a Big Relief

Another important announcement is the removal of GST on life and health insurance policies. This means term insurance, ULIPs, family floater health plans, and senior citizen health covers will now be completely tax-free.

For the middle class, this is a significant step as insurance premiums will reduce, encouraging more people to buy protection plans. Insurance companies have also welcomed this decision, calling it a move that will improve financial security for households.

GST on Services and Restaurants

The GST Council also clarified the rules for restaurant services. Standalone restaurants cannot classify themselves as “specified premises” to charge 18% with input tax credit. This will prevent confusion and ensure fair taxation.

Additionally, valuation rules for lottery tickets and similar services will be aligned with the latest tax structure.

Faster Compliance and Business Reforms

For businesses, the GST meeting today has brought several ease-of-doing-business measures:

• Faster GST registration: Non-risky businesses can now get GST registration within 3 days.
• Quicker refunds: Exporters in sectors like textiles, pharma, and chemicals will receive refunds within 7 days, improving cash flow.
• GST Appellate Tribunal (GSTAT): The long-awaited tribunal will start functioning by December 2025, providing a quicker way to resolve tax disputes.

Impact on Economy and Markets

The GST rate cuts are expected to boost consumer demand in the FMCG, auto, and white goods sectors. Stock markets already reacted positively, with auto and consumer goods shares rallying after the announcements.

Experts believe that the simplified GST system could add up to 1% to India’s GDP growth in the coming year. While there will be a short-term revenue impact for the government, higher consumption is likely to balance the losses over time.

Key Takeaways for the Common Man

• Everyday items will get cheaper: From kitchen groceries to soaps and packaged food.
• Insurance premiums will reduce as GST is no longer applicable.
• Buying appliances like ACs, TVs, and refrigerators will be lighter on the pocket.
• Small cars and EVs remain affordable, while luxury cars and tobacco products will cost more.
• Businesses will benefit from faster registrations, refunds, and fewer compliance hurdles.

Final Thoughts

The 56th GST Council meeting marks a turning point in India’s tax structure. By cutting GST rates, simplifying slabs, and easing compliance, the government has taken some steps to support both the aspirational middle class and the business community.

For the common man, GST 2.0 is here to reduce prices, simplify taxes, and promote growth. As the new rates come into effect from 22nd September 2025, consumers and businesses alike will start feeling the impact of these changes.