Wed Sep 03 17:54:21 UTC 2025: **GST Council Streamlines Tax Structure, Announces Rate Changes**

**New Delhi, September 3, 2025** – In a major overhaul of the Goods and Services Tax (GST) structure, the GST Council announced today that it will be streamlining the tax regime to just two primary rates: 5% and 18%, effective September 22nd. This decision, hailed as a “Next-Generation GST Reform” by the Nirmala Sitharaman Office via Twitter, aims to simplify the tax system and make essential goods more affordable.

Many everyday items will now fall under the 5% bracket. These include staples like milk, roti, paneer, ghee, biscuits, sauces, pasta, dry fruits, pizza bread, soap, shampoo, toothpaste, candles, toys, furniture, solar and wind devices, and biogas equipment. Essential healthcare items such as critical drugs and bandages will also be taxed at 5%, while oxygen, glucometers, and related kits will be exempt from GST entirely.

Textiles, televisions, and cement will be taxed at either 5% or 18%, depending on the specific item classification. Small cars and bikes will be subject to the 18% rate.

A significant announcement included the removal of GST on Ultra-High Temperature (UHT) milk, prepackaged and labelled chena or paneer, and all Indian breads, including chapati, roti, paratha, and parotta. This move is expected to provide relief to consumers and boost the sales of these essential food items.

While the majority of goods will fall under the 5% or 18% tax brackets, a special 40% tax rate will be levied on luxury items such as luxury cars, large SUVs, cigarettes, tobacco, gutkha, and carbonated drinks with added sugar.

Furthermore, the GST Council has decided to exempt all individual life insurance policies, including term life, ULIP, and endowment policies, as well as reinsurance, from GST. This initiative aims to make insurance more accessible to the general public and increase insurance coverage across the country.

These reforms are expected to have a multi-sectoral impact and contribute to a more efficient and consumer-friendly tax system.

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