GST Meeting Highlights: PM Modi hails ‘timely change’, says rejig a ‘double blast of happiness’

LIVE coverage of the GST Council meet and GST rate rationalisation has now ended. Stay with Livemint for the latest news and updates!

Rakesh Jain, CEO, Reliance General Insurance feels that the GST Council’s decision to exempt health insurance premiums while allowing insurers to utilise input tax credits is a landmark step that combines consumer benefit with industry growth.

“This reform will make health protection more affordable for millions of families, senior citizens, and small businesses who often find premiums to be a stretch. By lowering the cost of entry, it encourages more individuals to seek coverage earlier, thereby strengthening the risk pool and improving the long-term resilience of the insurance sector,” he added.

According to Archit Gupta, Founder & CEO of ClearTax, the GST rate cuts could shave off as much as ₹45,000 in annual daily expenses, for a middle-class household earning around ₹12 lakh per year.

“For many middle-class households earning around ₹12 lakh per year, everyday expenses like food, health insurance, education, electronics, and other essentials typically add up to about ₹6 lakh annually. With the new GST cuts, these costs could drop by nearly ₹45,000 a year,” Gupta pointed out.

“Adding income tax rebate of around ₹80,000 brings total savings to over ₹1.25 lakh, effectively an unspoken raise of over 10 per cent of your annual earnings,” he added.

Gupta felt that these savings will encourage more households to participate in capital markets, and further expand India’s growing investor base.

Bhuvaneswari Nara, Vice Chairperson and MD of Heritage Foods has announced that the company will pass full benefits from the GST reforms to the customers.

She called the GST rejig a welcome move, noting that moving everyday staples like paneer to the nil slab, and ghee, butter, and cheese to 5 per cent, “will have a broad impact, as these categories touch nearly 100 per cent of households”.

“Not only do these essentials lighten the monthly grocery bill, but the reforms also help high-quality, branded products compete effectively with unorganized and unregulated producers. This shift strengthens formal supply chains, builds consumer trust, and supports more nutritious diets. Dairy products such as paneer, butter, and ghee are staples in every Indian kitchen, yet rising prices have forced many families to switch to cheaper substitutes that lack similar nutritional value,” she noted.

Nara added that Heritage Foods “shall be passing on the full benefits of these reforms to our consumers, helping boost the festive mood in our markets”.

Naveen Chandra Jha, MD & CEO of SBI General Insurance feels that the GST tax cut for the healthcare sector “marks a transformative step toward greater affordability and inclusivity”. He called it “a timely catalyst” that addresses one of the biggest barriers to quality healthcare — affordability.

“Whether it is making life-saving drugs more accessible or lowering the cost of health insurance, the move directly tackles a long-standing challenge and will enable millions of families to take a crucial step toward financial and medical security. This change comes at a pivotal moment as the importance of universal health coverage has never been more evident,” he added.

PM Narendra Modi posted on X, “India’s hardworking middle class is at the heart of our growth journey.”

He added that the combined income tax cuts and GST reforms make products like TVs, ACs and everyday essentials more affordable, adding, “we are committed to enhancing ease of living and supporting the aspirations of crores of families.”

According to Vinay Kushwaha, Chief Operating Officer of Bombay Realty (Wadia Group), the GST rate rationalisation for cement and essential household goods can significantly enhance affordability and improve quality of life.

“With lower construction inputs and everyday savings, families will have greater capacity to invest in their future homes. This move supports both economic growth and the aspiration of homeownership. It’s a strategic step toward a stronger, more inclusive real estate ecosystem,” he added.

Speaking at the National Awardee teachers event in Delhi, Prime Minister Narendra Modi has called the GST reforms a “timely change” and in line with his promise of “double blast of happiness”.

“Without timely changes, we cannot give our country its rightful place in today's global situation. I had said from the Red Fort on 15 August this time that it is crucial to undertake next-generation reforms to make India self-reliant. I had also promised the countrymen that there would be a double blast of happiness before this Diwali and Chhath Puja…” he stated.

According to Ratul Puri, Chairman, Hindustan Power, the GST Council’s decision is “progressive” and brings “greater clarity and efficiency to the power sector”.

“We believe this step will not only ease operations across the value chain but also strengthen India’s transition towards sustainable energy. While the tax rate on coal has been raised from 5% to 18%, the overall impact will be minor as the existing compensation cess of ₹400 per tonne has now been subsumed within the GST rate. However, to support the transition from fossil fuels to non-fossil sources, the reduction of GST on renewable sector products from 12% to 5% is truly transformative. It will further enhance renewable energy capacity and accelerate the adoption of green technologies such as biogas, solar cells, green hydrogen and battery energy storage systems,” he noted.

The GST Council on September 3 approved new two-tier slabs for GST — 5 per cent and 18 per cent, with e-commerce platforms now formally included in the second slab. While GST was earlier only applicable on certain online orders, it will now apply across deliveries, and platforms such as Swiggy and Eternal (Zomato) will likely hike platform fees to make up the costs.

Sin goods are items generally considered harmful to health and society, and as such includes pan masala, beedi, tobacco products such as chewing tobacco and gutka, cigarettes, and carbonated beverages including soft drinks and non-alcoholic drinks.

This highest tax rate will also apply to luxury goods such as automobiles with engine capacities exceeding 1,500 cubic centimetres (cc) and aircraft for personal use, Finance Minister Nirmala Sitharaman announced last night.

According to Venkatesh Gopalakrishnan, Director — Group Promoter’s Office, MD — Shapoorji Pallonji Real Estate (SPRE), the reduction in costs for construction material should improve margins for the realty industry and make home ownership more accessible to buyers.

“We welcome the decision to rationalise tax rates on essential construction materials. The rate cut from 28% to 18% on cement, and from 12% to 5% on construction and finishing materials, is a strategic move. It will significantly ease project costs for developers and boost affordability for homebuyers," he said.

“From the perspective of the housing market, especially the affordable and mid-income segments, this development is timely and impactful. The potential pass-through of savings will encourage renewed demand. It will also enable more accessible homeownership. We are optimistic that this reform will enhance purchase intent. This is especially true as we enter the festive season, a traditionally strong period for the real estate market,” he added.

The GST Council on September 3 approved the two-tier taxx system (5 per cent and 18 per cent), with a “special rate” of 40 per cent on luxury items and “sin goods”.

Notably, while the remaining GST reforms will come into effect from September 22, the special rate, which will become the highest slab, will only come into effect once the debt obligations are cleared.

The GST Council Chair will deliberate and give details on this at a later date once the decisions are made.

As per Arpit Bhatia, Director at Laborate Pharmaceuticals, the 56th GST Council's decision to place all medicines and medical devices under 5 per cent slab, and to exempt 36 life saving drugs from September 22, “is a structural positive for the sector”.

“A simpler two slab regime reduces classification disputes and improves pricing clarity across the supply chain. Provided refunds of accumulated input tax credit are processed quickly where the duty structure is inverted, the reform should ease working capital and support wider access in semi urban and rural markets,” he added.

According to Rajiv Sabharwal, MD and CEO of Tata Capital, the GST reform is a “bold and timely move” that will “ease costs for households, improve affordability for the middle class and promote ease of business for MSMEs —all of which are central to driving India’s consumption story”.

“By easing taxes on essentials, education, healthcare, and mobility, this step directly enhances purchasing power and creates more room for discretionary spending. This is not just a tax cut but a structural enabler of inclusive growth and ease of living, reinforcing India’s journey towards a more consumption-driven, resilient economy. Importantly, it strengthens the road to Viksit Bharat by empowering everyday consumers and enterprises alike,” Sabharwal added.

GST Council Meeting LIVE Updates: Items falling under the 40% tax slab are luxury and sin goods, including tobacco and pan masala, products such as cigarettes, bidis, and aerated sugary beverages and on luxury vehicles, high-end motorcycles above 350cc, yachts, and helicopters.

GST Council Meeting LIVE Updates: 18% slab consists of goods and services such automobiles including small cars and motorcycles (up to 350cc), consumer goods like electronic items, household goods, and some professional services and all auto parts.

GST Council Meeting LIVE Updates: The 5% tax slab consists of essential goods and services such as butter, ghee, cheese, dairy spreads, pre-packaged namkeens, bhujia, mixtures, and utensils; agricultural equipment like drip irrigation systems, sprinklers, bio-pesticides, micronutrients, soil preparation machines, harvesting tools, tractors, and tractor tires; handicrafts and small industries like sewing machines and their parts and health and wellness like medical equipment and diagnostic kits.

GST Council Meeting LIVE Updates: Calling the GST reforms "historic", Rajasthan Chief Minister Bhajanlal Sharma wrote on X, “In line with the announcement of next-generation reforms in GST in the Prime Minister Shri @narendramodi ji's Independence Day speech, the decision to abolish the 12% and 28% GST slabs in the GST Council meeting held under his guidance is historic.”

GST Council Meeting LIVE Updates: The move to simplify GST rates into two slabs from September 22, 2025, is projected to increase the country's GDP by 0.2-0.3% in the 2025-26 financial year, ANI reported, citing Bank of Baroda economist Sonal Badhan.

GST Council Meeting LIVE Updates: These goods attracted compensation cess in addition to GST. Since it has been decided to end the compensation cess levy, the tax has been increased to maintain the pre-rate rationalisation level of tax.

GST Council Meeting LIVE Updates: Motor vehicles designated as ambulances and properly fitted with all necessary components, furniture, and accessories required for an ambulance at the time of clearance from the factory will attract a GST rate of 18%, which has been reduced from 28%.

GST Council Meeting LIVE Updates: According to L C Mittal, Director of Motia Builders Group, “With the GST slab being rationalised for construction materials, developers will focus on innovation and value rather than just costs. The primary beneficiaries will be affordable and mid-segment housing categories, ensuring quality housing is accessible to families in urban and semi-urban areas.”

GST Council Meeting LIVE Updates: Delhi CM Rekha Gupta thanked PM Modi for implementing the GST reforms and stated that it will provide relief to businesses.

“I want to thank the Prime Minister; he has given a great gift to the common citizens of the country. Such significant relief will not only benefit the common man but also the healthcare sector, insurance, household goods, electronics, education, and many other sectors, for which the public thanks Prime Minister Modi,” Rekha Gupta told ANI.

“Understanding the sentiments of the people, he has reconsidered every issue one by one... This will enable all our small and large businesses to operate with great stability. I believe this will prove to be a major milestone,” she added.

GST Council Meeting LIVE Updates: Hailing the latest reforms, Minister of Commerce and Industry, Piyush Goyal, was quoted by ANI saying, “Yesterday's GST reforms are a step in the direction of ensuring an Atmanirbhar Bharat, an India which is self-sufficient, self-reliant, an India whose supply chains are self-reliant, an India that cares for every Indian. "

He added, "140 crore Indians coming together with the collective resolve to make India, Viksit Bharat by 2047, a developed and prosperous nation where everybody gets opportunity, where everybody becomes a participant of India's inclusive and sustainable growth story.”

GST Council Meeting LIVE Updates: According to the Finance Ministry, “If drugs or medicines are fully exempted, the manufacturers or dealers would not be able to claim input tax credit on GST paid on raw materials and will have to reverse the ITC paid on the inputs. This would increase their effective tax incidence and cost of production. This may in turn be passed on to consumers or patients in the form of higher prices, which in turn would make the measure counterproductive.”

GST Council Meeting LIVE Updates: GST on air conditioners and dishwashers has been reduced from 28% to 18%. Earlier TVs and monitors up to 32 inches attracted 18% GST, while larger TVs and monitors attracted 28% GST. Now all TVs and monitors will be uniformly taxed at 18%, the Finance Ministry informed.

GST Council Meeting LIVE Updates: The 5% GST rate applies to all medical devices, instruments, and apparatus used in medical, surgical, dental, and veterinary uses, except those specifically exempted.

GST Council Meeting LIVE Updates: The special rate applies only to a few select goods, mainly on sin goods and some luxury items, thus it is considered a special rate. Most of these goods attracted compensation cess in addition to GST. Since the decision has been made to abolish the compensation cess levy, the compensation cess rate is being merged into GST to maintain the same tax incidence on most goods. For other goods and services, the special rate has been applied as they were already subject to the highest GST rate of 28%.

GST Council Meeting LIVE Updates: The new tax slabs under GST are 0%, 5% and 18%. There is also a separate slab of 40% for 'sin' and luxury goods.

GST Council Meeting LIVE Updates: Union MoS Finance Pankaj Chaudhary told ANI, “The purpose behind making two slabs was that earlier there used to be four slabs, 5%, 12%, 18%, 28% and a lot of confusion was created in it. This has been done to remove that and to make the work of making GST easier... This will provide relief to the common man, small traders, MSMEs.”

GST Council Meeting LIVE Updates: Ravi Patodia, Member, Bhadohi Carpet Export Promotion Council (CEPC) told ANI, "The rates of normal consumption items have been reduced from 12% and 18% to 5% and this is a very good thing. This will provide a lot of relief to the general public. The tax burden will be reduced and inflation will also be reduced... It is a good decision considering the current tariff crisis."

GST Council Meeting LIVE Updates: Speaking on the benefits of GST reforms, trade expert Dileep Baid told ANI, “For my sector, handicraft sector, this might become a lifeline because, as we all know, tariffs have disrupted the entire handicraft sector and have put a question mark on employment of lakhs of people in this sector."

He added, "as we were thinking of looking for alternative markets, India is the best alternative for this and now with these reduced GST rates on handicrafts, we will grow our Indian market. In return, it will save the employment of artisans and craftsmen.”

GST Council Meeting LIVE Updates: Lauding the GST reforms, Radhika Gupta, MD & CEO of Edelweiss Mutual Fund wrote on X, “Extremely progressive step at a very critical time that should help boost both demand and sentiment! When the world pushes us into a corner, we push ourselves to fight back harder.”

GST Council Meeting LIVE Updates: According to the Ministry of Finance, “These goods (face powder and shampoos) are daily use items for almost all segments of the population. Although expensive face powder and shampoos sold by MNCs or luxury brands will also benefit, the objective of the rate rationalisation exercise is to further simplify the tax structure. Administering a tax based on brand or value of cosmetics will create complexity in the tax structure, besides posing challenges for administration.”

GST Council Meeting LIVE Updates: The GST rate on coal has been increased to 18%. According to FAQs released by the Ministry of Finance, coal attracted 5% GST+ Compensation Cess of ₹400/ton prior to rate rationalisation. The Council has recommended ending Compensation Cess, and hence, the rate has been merged with GST. There is no additional burden.

GST Council Meeting LIVE Updates: The GST Council recommended reducing the GST rate to 5% on toothpaste, toothbrushes, and floss, which are recognised as basic dental hygiene goods.

GST Council Meeting LIVE Updates: Highlighting the impact of the latest reforms, Revenue Secretary Arvind Shrivastava said that the net revenue implication will likely be nearly ₹48,000 crore.

“The net revenue implication is expected to be around ₹48,000 crore, based on the consumption base of 2023–24, as that is the year for which we had segregated data. To better appreciate this exercise, it is important to understand that focusing narrowly on a single number may not reflect the full picture. Typically, a rate rationalisation exercise generates buoyancy effects,” Shrivastava was quoted by IANS.

GST Council Meeting LIVE Updates: Hailing the latest GST reforms, RPG Group Chairman Harsh Goenka wrote on X, “Big Diwali gift for every Indian! GST on daily essentials, healthcare, education & farming inputs slashed.”

GST Council Meeting LIVE Updates: GST rate on tendu leaves has been reduced to 5% as tobacco leaves are already at 5%. Tendu leaves are also a minor forest product.

GST Council Meeting LIVE Updates: The policies covered under the exemption recommended on health insurance are all individual health insurance policies including family floater plans and senior citizen policies and the reinsurance services.

GST Council Meeting LIVE Updates: Betting, casinos, gambling, horse racing, lottery and online money gaming will attract 40% GST.

GST Council Meeting LIVE Updates: Beauty and physical well-being services, including services of health clubs, salons, barbers, fitness centres, yoga, etc., will attract a GST rate of 5% without input tax credit. These services attracted 18% GST earlier.

GST Council Meeting LIVE Updates: According to Akash Parwal, CEO of Square Insurance, “Removing GST from health and life insurance would directly reduce the cost of premiums, making insurance products more affordable and accessible. At present, the 18% GST increases the cost of a ₹25,000 health policy by approximately ₹4,500, which can discourage middle-class households and younger buyers from purchasing coverage. Eliminating this tax could support the objective of increasing insurance penetration in India, where less than 5% of the population has life cover and under 1% has health insurance.”

GST Council Meeting LIVE Updates: In a post on the social media platform X, Prime Minister Narendra Modi hailed the GST reforms and said, “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.”

He added, “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.”

According to stock market experts, the outcome of the GST Council meeting would positively impact the Indian stock market. They are expecting a gap-up opening on Thursday as the GST reforms announced yesterday have the potential to act both as an economic catalyst and as a strategic buffer against Trump's tariffs. Read full report here

The Office of Finance Minister Nirmala Sitharaman said, “The GST Council has approved significant reforms today. These reforms have a multi-sectoral and multi-thematic focus, aimed at ensuring ease of living for all citizens and ease of doing business for all.” Here's what's getting costlier and cheaper:

“We’ve been working on GST rate rationalisation for 1.5 years… compensation cess ends once loan is repaid. None of this has to do with tariffs.”, said Finance Minister Nirmala Sitharaman

According to Archit Gupta, Founder & CEO of ClearTax, “The new GST reforms announced today, effective from 22nd September, will drive greater demand for compliance automation." 

“With multiple rate reductions, businesses will need to recalibrate input tax credit (ITC) claims, reconciliation, and reporting processes. This will significantly increase the need for GST and e-invoicing automation tools to minimize misclassification risks and ensure compliance accuracy. Moreover, process reforms such as automatic registration within three working days and faster provisional refunds will encourage more businesses, particularly MSMEs and SMEs, to enter the GST ecosystem,” he added. 

According to Pratik Jain, Partner at Price Waterhouse & Co, the GST council has come up with the “biggest and boldest rate cuts since introduction of GST”, which could lead to significant buoyancy in demand by boosting consumption.

“Since the rate cuts are applicable from September 22nd, it gives some time for industry to prepare for the changes, including mechanism to pass on the benefits to consumers. Timing of these changes couldn't have been better, just ahead of the festive season. Diwali has come earlier for the common man,” Jain added.