GST Council’s 56th Meeting: Major GST Rate Changes (3rd September 2025)
The 56th GST Council meeting, held on 3rd September 2025, announced significant rate rationalisations across consumer goods, services, banking & insurance, and technology. The reforms aim to simplify GST structure, reduce household expenses, and encourage growth in key industries.
🛒 Consumer Goods & Services
| Category / Service | Old Rate | New Rate |
|---|---|---|
| Packaged food items (namkeen, sauces, butter, jams, cornflakes, baby diapers) | 12% | 5% |
| UHT milk, paneer, pizza bread, khakhra, roti, paratha & Indian breads | 5% / 18% | Exempt |
| Ice-creams, biscuits, pastries, cakes, chocolates | 18% | 5% |
| Stationery (notebooks, pencils, sharpeners, erasers, maps) | 12% | Exempt |
| Air conditioners, TVs ≤ 32 inches, dishwashers | 28% | 18% |
| Bicycles, tricycles, scooters, pedal cars, toys, board games | 12% | 5% |
| Imported personal-use goods (excluding medicines) | 28% | 18% |
| Handicrafts & leather goods | 12% | 5% |
| Footwear ≤ ₹2,500 per pair | 12% | 5% |
| Apparel ≤ ₹2,500 per piece | 12% / 5% | 5% |
| Apparel > ₹2,500 per piece | 12% | 5% |
| Soaps, shampoos, toothbrushes, bicycles, kitchenware | 18% / 12% | 5% |
| Aerated waters & carbonated drinks | Existing + Cess | 40% |
| Tobacco & related products | Existing + Cess | 40% |
🏨 Services Sector
| Service | Old Rate | New Rate |
|---|---|---|
| Passenger & goods transport | 12% with ITC | 18% with ITC |
| Hotel accommodation ≤ ₹7,500/day | 12% with ITC | 5% without ITC |
| Beauty & wellness (gyms, salons, barbers, yoga) | 18% with ITC | 5% without ITC |
💰 Banking, Financial Services & Insurance (BFSI)
| Service | Old Rate | New Rate |
|---|---|---|
| Life insurance (term life, ULIP, endowment) | 12% | 5% |
| Health insurance (family floater, senior citizen, reinsurance) | 12% | Exempt |
| Third-party motor insurance (goods carriage) | 12% | 5% |
📡 Technology, Media & Telecom (TMT)
| Goods / Services | Old Rate | New Rate |
|---|---|---|
| Electric accumulators & Lithium-ion batteries | 28% | 18% |
| High-performance batteries (for drones & defence) | 18% | Exempt |
| Software-defined radios with component | 18% | Exempt |
| Two-way radios (walkie-talkies for defence & police) | 12% | 5% |
| Local delivery services via E-Commerce Operators (ECO) | Not clear earlier | 18% |
🔑 Key Takeaways
- Daily essentials like milk, butter, bread, and packaged food will now be cheaper.
- Education items such as notebooks and pencils are fully exempt, reducing school costs.
- Appliances & electronics like TVs and ACs are more affordable, supporting festive demand.
- Insurance premiums will reduce, making life and health cover more accessible.
- Technology & green energy gain a push through lower GST on batteries and communication devices.
- Hotels & wellness services become cheaper, but transport may see a slight cost increase.
✅ Conclusion
The 56th GST Council meeting has simplified the tax structure with dual slabs of 5% and 18% (plus 40% for sin goods). These reforms are expected to:
- Lower household expenses
- Encourage consumption during festive season
- Support MSMEs, artisans, and small businesses
- Promote wider insurance adoption
- Boost EV and technology adoption
👉 Overall, the changes mark a pro-consumer and pro-business shift in India’s GST framework.