#NextGenGST | Historic Rate Cuts Announced at 56th GST Council Meeting

#NextGenGST | Historic Rate Cuts Announced at 56th GST Council Meeting

New Delhi, September 3, 2025 – Union Finance Minister Nirmala Sitharaman today announced a sweeping set of reforms under the Goods and Services Tax (GST), calling them a “game-changing step towards ease of living, ease of doing business, and stability in tax structures.”

She recalled that the Prime Minister had set the tone for the next-generation reforms on August 15 from the Red Fort, promising relief by Diwali. “We are delivering on that commitment at the earliest,” she said.

Relief for the Common Man

Items of daily use such as hair oil, toilet soaps, shampoos, toothbrushes, toothpaste, bicycles, tableware, kitchenware, and household articles will now attract only 5% GST.

In a big move for households, ultra-high temperature milk, paneer, chena, and all Indian breads have been exempted from GST, reduced from 5% to nil.

Food & FMCG Sector Gets a Boost

The GST rate on a wide range of packaged food products including namkeen, bhujiya, sauces, pasta, instant noodles, chocolates, coffee, preserved meat, cornflakes, butter, and ghee has been cut from 12% or 18% to 5%.

Middle-Class Aspirations Addressed

“The items on which GST has been reduced from 28% to 18% fulfill the aspirations of the middle class,” Sitharaman said.

• Air-conditioners, televisions above 32 inches (now all TVs), dishwashing machines, small cars, and motorcycles up to 350 cc will now attract 18% GST instead of 28%.

Support for Farmers & Rural Economy

Agricultural machinery such as tractors, forestry and gardening machines, harvesters, threshers, composting machines, and bio-pesticides have seen a rate cut from 12% to 5%.

Natural menthols and products widely used in farming have also been brought under lower GST slabs.

Handicrafts & Cottage Industry Relief

Handicrafts, marble, travertine blocks, granite blocks, and medium leather goods will now be taxed at just 5% instead of 12%, giving a boost to traditional industries and small-scale artisans.

A Reform Beyond Rates

The Finance Minister emphasized that this reform is not only about rationalizing rates but also about structural stability in GST, correction of inverted duty structures, and resolution of classification issues.

“I want to thank every member of the GST Council and every Finance Minister who attended the 56th meeting,” Sitharaman said.

With these reforms, the government has signaled a strong intent to bring predictability, fairness, and simplicity into India’s indirect taxation regime.