SRINAGAR: Prime Minister Narendra Modi on Wednesday hailed the GST Council’s decision to approve a wide-ranging set of rate cuts and reforms proposed by the Union Government, calling it a collective step that will benefit the common man, farmers, MSMEs, the middle class, women and youth.
In a post on X, the Prime Minister said that during his Independence Day speech, he had spoken about the intention to bring next-generation reforms in GST. He noted that the Union Government had prepared a detailed proposal for broad-based GST rate rationalisation and process reforms, aimed at ease of living for the common man and strengthening the economy. “Glad to state that the GST Council, comprising the Union and the States, has collectively agreed to the proposals submitted by the Union Government on GST rate cuts and reforms, which will benefit the common man, farmers, MSMEs, middle class, women and youth. The wide-ranging reforms will improve the lives of our citizens and ensure ease of doing business for all, especially small traders and businesses,” the Prime Minister posted.
During my Independence Day Speech, I had spoken about our intention to bring the Next-Generation reforms in GST.
The Union Government had prepared a detailed proposal for broad-based GST rate rationalisation and process reforms, aimed at ease of living for the common man and…
— Narendra Modi (@narendramodi) September 3, 2025
The fifty-sixth meeting of the GST Council, held in New Delhi, approved what have been described as next-generation reforms with a focus on improving lives and ensuring ease of business across sectors. The Council decided to exempt GST on all individual life insurance and health insurance policies, including term life, ULIPs, endowment, family floater and senior citizen policies, along with their reinsurance. It also simplified the four-tiered GST structure into a citizen-friendly two-rate system comprising a standard rate of 18 per cent and a merit rate of 5 per cent, while maintaining a special de-merit rate of 40 per cent for select goods and services.
The rate cuts announced cover a wide range of goods and services. The GST on common household items such as hair oil, toilet soaps, shampoos, toothbrushes, toothpaste, bicycles, tableware, kitchenware and other domestic articles has been reduced from 18 per cent or 12 per cent to 5 per cent. Essential food items, including ultra-high temperature milk, packaged paneer and all Indian breads such as chapati, roti, paratha and parotta, will now attract nil GST. A reduction from 12 per cent or 18 per cent to 5 per cent has been approved on packaged food items like namkeens, bhujia, sauces, pasta, instant noodles, chocolates, coffee, preserved meat, cornflakes, butter and ghee.
Consumer durables too will see relief, with the rate on air conditioners, televisions up to 32 inches, dishwashers, small cars and motorcycles of 350cc or less brought down from 28 per cent to 18 per cent. Agricultural goods and machinery, including tractors, harvesters, threshers, fodder balers, mowers and composting machines, will now attract GST at 5 per cent instead of 12 per cent. Labour-intensive goods such as handicrafts, marble and granite blocks and intermediate leather goods have also been brought under the 5 per cent slab.
A significant reduction has been announced in the construction sector, with GST on cement lowered from 28 per cent to 18 per cent. The health sector stands to benefit from major relief measures. Thirty-three lifesaving drugs and medicines have been exempted from GST, while three critical medicines used for treating cancer, rare diseases and other severe chronic conditions will also be taxed at nil rates. The rate on all other drugs and medicines has been cut from 12 per cent to 5 per cent. Medical apparatus, devices and diagnostic kits too will attract only 5 per cent GST, down from 12 per cent or 18 per cent.
The automobile sector will see the reduction of GST from 28 per cent to 18 per cent on small cars, motorcycles below 350cc, buses, trucks and ambulances, while a uniform rate of 18 per cent has been fixed on all auto parts irrespective of their classification. The textile and fertiliser sectors will benefit from the correction of inverted duty structures, with GST on manmade fibre brought down from 18 per cent to 5 per cent, and on yarn from 12 per cent to 5 per cent. Fertiliser inputs such as sulphuric acid, nitric acid and ammonia will now be taxed at 5 per cent instead of 18 per cent.
Further relief has been extended to renewable energy, where devices and parts for their manufacture will attract 5 per cent GST instead of 12 per cent. Hotel accommodation services costing Rs 7,500 or less per day have been moved from 12 per cent to 5 per cent. The Council has also cut GST from 18 per cent to 5 per cent on beauty and wellness services such as gyms, salons, barbers and yoga centres.
The sweeping measures, hailed by the Prime Minister as historic, are expected to ease the burden on households, encourage consumption, and provide significant relief to critical sectors including health, agriculture, small industry and renewable energy.
