Major Tax Reliefs for Common Man, Farmers, Health Sector
VINOD BHAT
NEW DELHI, Sep 3: The 56th meeting of the Goods and Services Tax (GST) Council, held in New Delhi today, approved sweeping reforms aimed at simplifying India’s indirect tax regime and easing the burden on the common citizen. The reforms, aligned with Prime Minister Narendra Modi’s “next-generation GST” vision announced from the Red Fort on August 15, 2025, are designed to be citizen-centric, business-friendly, and growth-oriented.
Finance Minister Nirmala Sitharaman, who chaired the meeting, said the changes represent “a principled and strategic evolution of India’s tax framework, ensuring affordability for citizens and ease of doing business for traders, farmers, and small industries.”
Simplified Tax Structure
In a landmark decision, the GST Council approved the rationalisation of the current four-tier rate system into a simplified three-tier framework:
Merit Rate: 5%
Standard Rate: 18%
De-merit Rate: 40% (for a select few goods and services)
This, officials said, would make GST more transparent and predictable, benefiting both businesses and consumers.
Relief for the Common Man
A host of everyday items have seen major tax cuts:
GST on hair oil, soaps, shampoos, toothbrushes, toothpaste, bicycles, tableware, kitchenware, and other household articles slashed from 12%/18% to 5%.
GST on ultra-high temperature (UHT) milk, packaged paneer, and all Indian breads (roti, paratha, parotta, etc.) reduced from 5% to zero.
GST on popular food products—namkeens, noodles, chocolates, sauces, coffee, cornflakes, butter, and ghee—cut from 12%/18% to 5%.
Healthcare and Insurance Boost
The Council exempted GST on all individual life insurance policies—including term, ULIP, and endowment policies—and health insurance policies, including senior citizen and family floater plans.
Additionally, lifesaving drugs have been made cheaper:
33 medicines reduced from 12% to zero, and three critical drugs for cancer and rare diseases cut from 5% to zero.
All other medicines reduced from 12% to 5%.
Medical devices and diagnostic kits brought down to 5% from 12% or 18%.
Support for Farmers and Labour-Intensive Sectors
To strengthen agriculture and rural economy:
GST on tractors, soil preparation equipment, threshing and harvesting machinery, and composting machines has been cut from 12% to 5%.
Labour-intensive goods such as handicrafts, marble, granite, and intermediate leather goods have also been reduced to 5%.
Fertilizer manufacturers will benefit from correction of inverted duty structure, with sulphuric acid, nitric acid, and ammonia now taxed at 5% instead of 18%.
Industry and Infrastructure Gains
GST on cement reduced from 28% to 18%, expected to bring down construction costs.
GST on manmade fibre reduced from 18% to 5%, and manmade yarn from 12% to 5%, correcting long-standing issues in the textile sector.
Renewable energy devices and components cut from 12% to 5%.
Automobiles and Transport
The Council announced sweeping rate cuts across the automobile and transport sector:
Small cars and motorcycles (up to 350cc) reduced from 28% to 18%.
GST on three-wheelers, buses, trucks, and ambulances brought down to 18%.
Auto parts to have a uniform 18% rate, eliminating classification disputes.
All TVs now taxed at 18%, including those up to 32 inches.
Hospitality and Services
Hotel accommodation costing up to ₹7,500 per day will now attract 5% GST, down from 12%.
Beauty and wellness services—including gyms, salons, barbers, and yoga centres—reduced from 18% to 5%.
A Citizen-Centric Evolution
Officials described today’s decisions as one of the most comprehensive overhauls of the GST framework since its launch in 2017. The emphasis, they said, is on affordability, healthcare, agriculture, and small businesses, while also simplifying compliance and resolving long-pending sectoral grievances.
“These reforms are not just about rates; they are about ensuring that GST touches the life of every citizen positively,” Finance Minister Sitharaman said.
The reforms are expected to be rolled out in a phased manner over the coming months, with states and industry stakeholders working closely with the Centre to ensure smooth implementation.
