GST Council Slashes Rates on 396 Items: 10 Things You Should Know Before Making a New Purchase

The 56th meeting of the Goods and Services Tax (GST) Council, chaired by Union Finance Minister Nirmala Sitharaman, is set to be concluded on September 4, after two days of deliberations beginning September 3. In a significant move aimed at easing the tax burden on the common man, the Council approved a GST rate reduction on 396 items. The revised rates will come into effect from September 22.

Key Things You Should Know About GST 2.0

Here are 10 key takeaways from the GST Council’s latest decisions:

1. New GST Slabs Introduced: The Council has introduced two new GST slabs of 5% and 18%, along with a special slab for select items. These changes are aimed at simplifying the rate structure and making essential goods and services more affordable.

2. GST Exemptions on Insurance: In a major step towards boosting insurance penetration, the Council has completely exempted GST on all individual life insurance policies, including term life, ULIPs, and endowment policies, as well as their reinsurance. Additionally, individual health insurance policies—including family floaters and senior citizen plans—are now GST-free, making insurance more accessible and affordable for the general public.

3. Footwear and Apparel Threshold Revised: To benefit lower-income consumers, the 5% GST threshold for footwear and apparel has been raised from ₹1,000 to ₹2,500.

4. Daily Essentials Made Cheaper: The Council announced zero GST on several daily-use unpackaged food items such as paneer, UHT milk, and all varieties of Indian bread, which were previously taxed at 5%.

5. Food & Beverage Tax Relief: A wide range of commonly consumed food items have seen a steep GST cut from 18% to 5%. These include:

• Butter, ghee, and dry fruits
• Condensed milk, sausages, and meats
• Jams, jellies, fruit pulp, and juices
• Tender coconut water and namkeen
• Drinking water in 20-litre bottles
• Milk-based beverages, ice cream, biscuits, corn flakes, and breakfast cereals

6. Personal Care Products Get Cheaper: Items of daily personal use like shampoo, soap, toothpaste, toothbrushes, face powder, talcum powder, and hair oil will now attract a reduced GST of 5%, down from the earlier 18%.

7. GST on Automobiles Rationalised: The Council has reduced GST on 18% from 28%:

• Petrol, LPG, and CNG vehicles (under 1,200 cc and under 4,000 mm in length)
• Diesel vehicles (up to 1,500 cc and 4,000 mm length)
• Similarly, motorcycles up to 350 cc, as well as several consumer electronics like air conditioners, TVs, and dishwashers, will now also attract 18% GST.

8. Cement Becomes More Affordable: In a move that could bring down property construction costs, GST on cement has been cut from 28% to 18%.

9. Higher GST on Premium Footwear & Apparel: Footwear and clothing items priced above ₹2,500 will now face a higher GST of 18%, up from the previous 12%.

10. Luxury and ‘Sin’ Goods to Attract Steep Tax: A 40% GST rate will now be levied on:

• High-end petrol and diesel vehicles (above 1,200/1,500 cc and over 4,000 mm in length)
• Motorcycles above 350 cc
• Yachts, personal aircraft, racing cars, and station wagons

Additionally, items classified as ‘sin goods’, such as tobacco, will continue to attract a 40% GST rate.

Also Read: GST Collections Rise in August 2025 Ahead of GST Council Meet

Conclusion

The new GST reforms are expected to have a significant impact on both consumption patterns and affordability, especially for middle and lower-income groups. With a focus on essential goods and services, the GST Council aims to streamline the tax regime while driving economic inclusivity.

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