Thu Sep 04 14:26:32 UTC 2025: **Summary:**

The GST Council in India has significantly reduced GST rates on a wide range of goods and services, effective September 2025. This move, lauded by business federations and industry leaders, aims to simplify the tax structure, boost the economy, and provide relief to consumers and businesses. Key changes include a 0% tax on bread, a 5% tax on other bakery items, and a streamlining of GST slabs from four to two (5% and 18%). Essentials like paneer, UHT milk, Indian bread, and student supplies are now exempt from GST. Many goods previously taxed at 18% or 12%, including everyday items, have been moved to the 5% slab. Luxury items and harmful products remain taxed at 40%. Additionally, tax reductions for agricultural products, solar panels, and food processing machinery are expected to lower production costs and improve competitiveness in these sectors.

**News Article:**

**India Announces Sweeping GST Rate Cuts, Triggering Economic Optimism**

**Madurai, India – September 4, 2025** – The Indian government has announced significant reductions in Goods and Services Tax (GST) rates across various sectors, sparking widespread approval from businesses and consumers alike. The changes, effective immediately, are hailed as a major boost to the Indian economy and a “Diwali gift” to the nation, according to industry leaders.

The GST Council’s decision simplifies the tax structure, reducing the number of slabs from four to two primary rates: 5% and 18%. A significant move is the elimination of GST on bread and the reduction to 5% on other bakery products, a measure welcomed by the Indian Bakery Federation.

“This is a welcome development,” stated Anbu Rajan, president of the Indian Bakery Federation, adding that the simplified GST regime will encourage more businesses to pay taxes voluntarily.

Essential food items such as paneer, UHT milk, Indian bread varieties, and student supplies like pencils and crayons are now completely exempt from GST. Numerous everyday items, including butter, cheese, dry fruits, cosmetics, and household appliances, have been moved to the 5% slab. These measures are expected to provide significant relief to low-income households.

“The total average monthly household savings of the common man as a result of the second-generation GST rate revision would be ₹1,500 to ₹2,000, strengthening the purchase power of families,” said S. Rethinavelu, president of the Agri and All Trade Chamber.

Luxury vehicles and products like tobacco and aerated drinks will continue to be taxed at 40%. In contrast, tax rates for agricultural products and essential agri-inputs have been reduced, with taxes on food processing machinery dropping from 18% to 5%, which will help lower production costs and improve competitiveness.

The Tamil Nadu Chamber of Commerce and Industry also welcomed the announcement, particularly the streamlined GST slabs and the commencement of the GST Appellate Tribunal proceedings.

Economists predict that these changes will lead to a decrease in inflation and stimulate economic growth by increasing consumer spending and encouraging investment.

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