The 56th GST Council meeting, chaired by Finance Minister Nirmala Sitharaman, began in New Delhi on September 3. The meeting is scheduled for two days, from September 3 to 4. The Council focused on GST rate rationalisation, with key proposals to remove the 12% and 28% slabs.
The revised structure included new rates of 18% and 5%, with a 40% slab on sin goods. Officials discussed lowering tax burdens on essential goods while keeping high rates on harmful and luxury items. The meeting marked an important step in simplifying India’s indirect tax system.
#WATCH | Delhi: After the 56th GST Council meeting, Union Finance Minister Nirmala Sitharaman says, “There is a special rate which is 40%. Almost all goods are between 18% and 5%. There is one special rate which is only for sin and super luxury goods. That special rate of 40% has… pic.twitter.com/nFZZMhbfVi
— ANI (@ANI) September 3, 2025
GST Council Introduces 40% Slab for Sin Goods
The Council placed sin goods and luxury items under the 40% GST slab. Tobacco, gutka, pan masala, chewing tobacco, cigarettes, cigars, and nicotine substitutes attracted this highest rate, along with a cess up to 96% in some cases.
Sugar-sweetened drinks such as carbonated and caffeinated beverages moved from 28% to 40%, with an additional 12% cess on certain items. The Council also applied the 40% slab to lottery, casinos, and online gaming. Luxury vehicles like SUVs above 1,500cc engines and long vehicles now fall into the same bracket, along with a 22% compensation cess.
GST on Automobiles and Parts Fixed at 18%
The GST Council finalised an 18% slab for small cars, motorcycles up to 350cc, three-wheelers, buses, trucks, and ambulances. Auto parts across categories also fall under this rate. The decision brought uniformity across the automobile sector, replacing earlier slab differences. Finance Ministry officials confirmed that large electronic appliances, including some previously taxed at 28%, will now attract 18%.
PM Narendra Modi tweets, “…Glad to state that GST Council, comprising the Union and the States, has collectively agreed to the proposals submitted by the Union Government on GST rate cuts & reforms, which will benefit the common man, farmers, MSMEs, middle-class, women and… pic.twitter.com/AxVHSj9E8G
— ANI (@ANI) September 3, 2025
The move aims to provide relief to buyers of smaller vehicles while keeping luxury vehicles in the 40% category. The Council said the changes ensure a fair balance between affordability and revenue generation.
GST Reduced to 5% on Fibres and Renewable Energy
The Council lowered GST to 5% on several key products. These included man-made fibre, yarn, fertiliser inputs, and renewable energy devices such as solar, wind, and biogas equipment. Officials said the reduction would encourage growth in agriculture and clean energy sectors. The decision also aimed at supporting India’s renewable energy targets.
#WATCH | Delhi: After the 56th GST Council meeting, Union Finance Minister Nirmala Sitharaman says, “Insurance services from 18% currently will go into two, three different categories. Exemption of GST on all individual life insurance policies, whether term life, ULIP, or… pic.twitter.com/nYrnmoHRVC
— ANI (@ANI) September 3, 2025
Fertiliser inputs under the 5% slab are expected to benefit farmers, while lower GST on yarn will aid the textile industry. Finance Minister Nirmala Sitharaman said the Council focused on cutting taxes in areas that directly impact production and daily use.
GST on Insurance Policies Reduced to Nil
The Council exempted all life and health insurance policies from GST. This includes term insurance, unit-linked insurance plans (ULIP), endowment policies, family health cover, and senior citizen plans. Reinsurance policies also moved to the nil tax category.
Officials confirmed that the move will directly reduce premium costs for policyholders. The Council said this decision would benefit families, senior citizens, and individuals seeking medical and life protection.
The exemption marked one of the most important announcements of the 56th meeting, as it linked taxation changes to health and financial security for citizens.
Processed Foods and Gambling Face Higher Tax Rates
The GST Council also considered health and lifestyle-related products while revising slabs. Processed junk foods with high salt, sugar, or trans fat content moved into the 40% category. Items such as packaged snacks and fast food will now face higher levies. Gambling, betting, and gaming activities will also remain under strict taxation, attracting the 40% slab.
Officials said these measures would act as both revenue sources and control mechanisms for harmful consumption. The Council’s decision kept public health in focus while ensuring that non-essential and high-risk activities remained heavily taxed.
Must Read: GST Meeting: FM Sitharaman Announces ZERO GST, BIG Reduction For Middle Class, Check Here
Swastika Sruti is a Senior Sub Editor at NewsX Digital with 5 years of experience shaping stories that matter. She loves tracking politics- national and global trends, and never misses a chance to dig deeper into policies and developments. Passionate about what’s happening around us, she brings sharp insight and clarity to every piece she works on. When not curating news, she’s busy exploring what’s next in the world of public interest. You can reach her at [swastika.newsx@gmail.com]
