GST Council Meeting 2025
The 56th meeting of the Goods and Services Tax (GST) Council introduced significant reforms within the eight-year-old indirect tax framework. These reforms aim to simplify the tax structure, reduce the tax burden on the common populace, and facilitate ease of doing business.
Key Decisions
- GST Slab Structure:
- Implementation of a broad two-slab structure: 5% and 18%, effective from September 22.
- A demerit rate of 40% for super luxury, sin, and demerit goods.
- Rate Reductions:
- Significant GST rate cuts for common-use items like fruit juices, cheese, medical items, and educational materials.
- Ultra-high temperature milk and certain food items attract nil GST.
- Reduction in GST for white goods like air conditioners and dishwashers from 28% to 18%.
- Small cars and motorcycles under certain engine capacities moved to the 18% slab.
- GST on electric vehicles remains at 5%.
- Insurance and Services:
- Blanket exemption for individual life and health insurance policies.
- Lower GST on beauty and wellness services from 18% to 5%.
Objectives and Benefits
- Addressing the inverted duty structure to improve cash flow and reduce classification disputes.
- Enhancing the ease of living and doing business, with focus on support for labour-intensive industries and agriculture.
- Ensuring stability and predictability of the GST system.
Financial Implications and Industry Response
- Estimated net revenue implication of Rs 48,000 crore, based on the 2023-24 consumption base.
- Correction of the inverted duty structure for the textile and fertilizer sectors.
- Industry leaders, like the Confederation of Indian Industry (CII), have welcomed the reforms, promising to pass on benefits to consumers and highlighting the potential for economic growth.
Consensus and Future Outlook
- The reforms were agreed upon by the Council despite initial concerns about revenue loss.
- Revenue Secretary described the proposal as fiscally sustainable.
- The reforms are seen as a step towards a simplified tax regime that benefits small traders and businesses.
Overall, the GST Council's decisions are aimed at streamlining the tax regime, providing significant relief to consumers and businesses, and fostering economic growth.
