Highlights: GST cut to negate Trump’s tariff; May hit Rs 2 Lakh crore, Experts warn of high revenue strain”

Revenue Department Secretary Arvind Shrivastava stated to ANI that the GST Council’s decision to address the inverted duty structure in the fertiliser field will majorly benefit farmers. He pointed out that reducing the GST on agricultural goods would not only lessen the cost of fertilisers but also increase farm yields.

”Under GST, the problem of inverted duty is being solved in the fertiliser field, which will enable and promote the domestic use of fertiliser,” Shrivastava mentioned while underlining the reform’s role in assisting the government’s push for increasing farmers’ income.

Mahindra Group Chairman Anand Mahindra welcomed the Centre’s decision to rationalise GST rates under the NextGen framework but appealed for ”more and faster reforms” in order to attract more investment and drive more consumption.

In a social media post on X, he stated that such steps would enlarge and strengthen India’s global voice, citing Swami Vivekananda’s call to ”arise, awake, and stop not till the goal is reached.”

Leading industry bodies have praised the Centre’s decision to streamline the GST regime, terming it a transformative move for India’s business environment. Confederation of Indian Industry (CII) Director General Chandrajit Banerjee described the reforms as a landmark decision. ”This move on GST reforms is a phenomenal milestone, ” Banerjee stated.

Senior Congress leader and Rajya Sabha MP P Chidambaram has welcomed the Centre’s recent decision to rationalise GST rates but asserted that the government’s action came too late. He mentioned on social media platform X, that tax cuts and structural changes are a positive step, they should have executed it earlier.

”The GST rationalisation and the reduction in rates on a range of goods and services are WELCOME but 8 years TOO LATE. The current design of GST and the rates prevailing until today ought not to have been introduced in the first place. We have been crying hoarse for the last 8 years against the design and rates of GST, but for please fell on deaf ears, ”stated Chidambaram.

Finance Minister Sitharaman said, “The tariff turmoil is not a matter that influenced the GST reform. Because we’ve been at it now for more than one and a half years. Some group of ministers was working on rate rationalisation. Some other group of ministers, a bit later, was working on insurance and so on. And compensation cess was a reality, that it is going to end the moment you pay back the loan. None of this has anything to do with the tariffs.”

Defence Minister Rajnath Singh posted on X, “The Government of India, under the leadership of PM Narendra Modi, has announced the Next-Gen GST reforms to bring relief across sectors. With tax rates reduced on many important items, this reform will bring ease of living, further strengthen ease of doing business, empower small businesses, and boost India’s self-reliance under Aatmanirbhar Bharat. I thank PM Modi and the FM Smt. Nirmala Sitharaman for taking this bold decision.”

Announced the “next-generation GST reforms”, Finance Minister Sitharaman announced that individual life insurance, health policies will be exempt from GST.

GST on small electric cars, electric SUVs and luxury electric cars to remain at 5%.

Sitharaman announced that all cars larger than 1,200 cc for petrol and 1,500 cc for diesel will attract 40% GST.

PM Narendra Modi welcomed the newly-introduced GST reforms. “During my Independence Day Speech, I had spoken about our intention to bring the Next-Generation reforms in GST. The Union Government had prepared a detailed proposal for broad-based GST rate rationalisation and process reforms, aimed at ease of living for the common man and strengthening the economy. 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 youth. The wide ranging reforms will improve lives of our citizens and ensure ease of doing business for all, especially small traders and businesses,” Modi posted on X.

Motorcycles exceeding 350 cc, aircraft for personal use will attract 40% GST rate, says Sitharaman.

Vinnie Mehta, DG of Automotive Component Manufacturers Association (ACMA), welcomed Centre’s latest rationalisation of GST slabs. “ACMA welcomes the government’s decision to bring all auto components under a uniform 18% GST slab — a long-standing recommendation of the industry. This landmark reform will help curb the grey market, ease compliance, support MSMEs, and enhance the global competitiveness and resilience of India’s automotive component industry.”

Sitharaman announced that paneer and all varieties of Indian breads have been exempted from GST, moving from the earlier 5% slab to nil. Packaged foods including namkeen, sauces, pasta, instant noodles, coffee, butter, ghee, cornflakes and chocolates will also be taxed at lower rates.

Finance Minister said items such as hair oil, toilet soap, soap bars, toothbrushes, cycles, tableware and other household articles will fall under the 5% GST bracket.

Sitharaman said that every member of the GST council agreed on the great rationalisation measures. The revised Goods and Services Tax (GST) rates on services will come into effect from September 22, 2025, the Finance Ministry announced. The new rates on goods will also be implemented from the same date, with the exception of select tobacco and pan masala products.

Products such as pan masala, gutkha, cigarettes, zarda, unmanufactured tobacco, chewing tobacco and bidi will continue to attract the current GST and compensation cess rates. These will remain unchanged until outstanding loan and interest obligations under the compensation cess account are fully discharged.

Finance Minister Nirmala Sitharaman has started media briefing on the Centre’s new slabs of GST. She says the reforms have been carried out “with the focus on common man”.

Revenue loss from the new GST slabs is pegged at Rs 93,000 crore.

All GST slab changes approved, new rates to be applicable from Sept 22

Under the revised GST rates, footwear will get cheaper. According to a PTI report, the 5 per cent GST threshold on footwear is going to be increased. Earlier, the footwear priced under Rs 1000 attracted 5 per cent GST while those over it were taxed at 12 per cent.

As per the report, under the revised rates, footwear priced under Rs 25,00 will now attract 5 per cent GST

According to CNBC TV-18 reports, the GST Council has taken a decision to reduce the registration period for non-risky businesses to 3 days. A similar process will be followed if the monthly liability is below Rs 2.5 lakh.

Further, the report says that the Council has taken a decision to refund the exporters in a 7-day period, based on the risk analysis. Further, there will be a provisional refund for the non-risky taxpayers.

Karnataka Finance Minister Krishna Byre Gauda has demanded an additional levy to protect the state’s revenue loss due to changes in the GST slabs.

Earlier, the Karnataka state government said that, according to their estimates, the state could see an annual shortfall of Rs 15,000 crore in its revenue. The state government says that the reduction in revenue would affect its ability to run the government.

According to reports, the GST Council has approved the dual GST slab of 5 per cent and 18 per cent.

Further, the Council has approved the elimination of the 12 per cent and 28 per cent GST slabs

Jammu and Kashmir Chief Minister Umar Abdullah said that the proposed revision of GST slabs could reduce the Union Territory’s revenue by 10 to 12 per cent. He added that the proposed changes could have severe fiscal implications.

In a statement, Abdullah said, “The proposed reform can further reduce our GST revenues by 10-12 per cent. Hence, as the Finance Minister of Jammu and Kashmir, I am of the opinion that establishing suitable mechanisms and safeguards for the fiscal stability of States and UTs is critical.”

The state governments are concerned about their revenue loss due to the overhaul of GST rates. The states of Karnataka, Punjab, and West Bengal have asked the GST Council for estimates on their revenue losses due to the changes in GST slabs.

Other states like Telangana and Sikkim have likely also asked the Council for the revenue loss estimates for their respective states. The GST Council has heard the demands of the states.

The Ministry of Finance said in an X post that Union Minister for Finance and Corporate Affairs Smt Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman chairs the 56th meeting of the GST Council in New Delhi today.

The participants included Union Minister for State for Finance, Chief Ministers of Delhi, Goa, Haryana, Jammu and Kashmir, Meghalaya and Odisha; Deputy Chief Ministers of Arunachal Pradesh, Bihar, Madhya Pradesh, and Telangana; Governor of Manipur; the Finance Ministers of States/UTs, besides Secretary of Department of Revenue, Chairman and Members of @cbic_india and senior officials of the Ministry of Finance @FinMinIndia.

In the ongoing GST Council meeting, the 33-member Council is deliberating the revenue loss effect of the GST slab revision. The state governments are also concerned about the loss of their revenue.

In the ongoing meeting, the council is taking into consideration the apprehension of the state governments about formulating an inclusive strategy.

Gaurav Garg of Lemonn Markets Desk says, “The 56th GST Council meeting is widely seen as a stepping stone towards GST 2.0, with rate rationalisation and slab consolidation at the core of discussions. The possible phasing out of the 12% and 28% brackets could simplify compliance and reduce disputes, while rate cuts on mass-consumption items are aimed at bolstering domestic demand.”

“At the same time, policymakers must balance revenue concerns, which likely means luxury and sin goods will remain under higher taxation. Overall, today’s deliberations signal a shift towards a cleaner and more growth-supportive indirect tax framework at a time when exporters are facing external headwinds,” Garg adds

A Deloitte survey highlights what India Inc are expecting from GST reform. The biggest expectation is the creation of a robust dispute resolution mechanism with time-bound audits and consistent rulings across central and state authorities, which companies say is crucial to cut down on litigation and uncertainty.

Businesses also want GST rate rationalisation, particularly the removal of the inverted duty structure, along with clearer rules to prevent expansive pro-revenue interpretations by tax officials. Another major ask is for working capital relief, with industry leaders pushing for measures such as cross-utilisation of CGST credit at a PAN level, faster refunds, and simplification of credit note provisions. Exporters, in particular, are demanding liberalised GST export rules to improve global competitiveness.

Read more: https://www.financialexpress.com/policy/economy-gst-council-meeting-set-to-simplify-tax-rates-but-deloitte-survey-flags-urgent-reforms-businesses-want-3965652/

A 33-member committee chaired by Union Finance Minister Nirmala Sitharaman is meeting today and tomorrow to decide on the GST reform. The body includes central finance leaders—such as the Minister of State for Finance—and the finance or tax ministers from all states and union territories, or their nominated representatives (sometimes including governors in emergencies).

Bihar’s Deputy Chief Minister, Samrat Chaudhary, is serving as the convenor of the Group of Ministers (GoM) that helped frame the agenda.

Read more: https://www.financialexpress.com/policy/economy-inside-56th-gst-council-meeting-whos-on-the-33-member-team-shaping-indias-tax-future-3965601/

At least eight sectors, including textiles, fertilisers, renewable energy, automotive, handicrafts, agriculture, health, and insurance, are expected to benefit the most from the rate overhaul.