GST Council clears new rate structure, to take effect on September 22

The Goods and Services Tax Council on Wednesday cleared a new slab structure, revamping it into a primarily two-rate system from the current four-tiered one.

The new GST system will comprise two slabs of 5% and 18%, Union Finance Minister Nirmala Sitharaman announced after the 56th meeting of the council.

However, a 40% GST rate will be applicable to “sin goods” such as carbonated beverages and tobacco products, and luxury items such as large cars.

The new rates will take effect on September 22 for most items, the minister said. Tobacco and related products will move to the new structure at a date that will be specified later.

Hon’ble Prime Minister Shri @narendramodi announced the Next-Generation GST Reforms in his Independence Day address from the ramparts of Red Fort.

Working on the same principle, the GST Council has approved significant reforms today.

These reforms have a multi-sectoral and… pic.twitter.com/NzvvVScKCF— Nirmala Sitharaman Office (@nsitharamanoffc) September 3, 2025

The new system will exempt GST on all individual life insurance policies, including term life, unit-linked insurance plan or endowment policies, and reinsurance, the finance ministry said. GST on all individual health insurance policies will also be exempted.

The new structure reduces the GST rate from 18% or 12% to 5% for several items of daily use such as toilet soap bars, shampoos,...

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