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Industry welcomes new two slab structure of GST commencing Sept 22
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Friday, 05 September, 2025, 08 : 00 AM [IST]
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Ashwani Maindola, New Delhi
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The 56th Goods and Services Council meeting has approved the generational reforms in the GST rates and services, as announced by Prime Minister Narendra Modi in his Independence Day speech.
The reforms wherein the 4 slab structure of 5, 12, 18, and 28% would now be restructured to a two slab structure of 5 and 18% and shall commence from September 22.
The Council called it a two rate structure with a standard rate of 18% and merit rate of 5% and a specific de-merit rate of 40% for select few goods and services like tobacco.
As per the approved proposal, now there would be reduction of GST from 5% to NIL on Ultra-High Temperature (UHT) milk, prepackaged and labelled chena or paneer along with all the Indian breads (Chapati or roti, paratha, parotta and so on), which will see NIL rates.
Also, there would be reduction of GST from 12% OR 18% to 5% on almost all of the food items such as packaged namkeens, Bhujia, Sauces, Pasta, Instant Noodles, Chocolates, Coffee, Preserved Meat, Cornflakes, Butter and Ghee.
However the carbonated beverages of fruit drink or carbonated beverage with fruit juice will now attract 40% tax against the present 28% tax.
Further, there would be reduction of GST from 12% to 5% on agricultural goods, such as tractors, agricultural, horticultural or forestry machinery for soil preparation or cultivation, harvesting or threshing machinery, including straw or fodder balers, grass or hay mowers, and composting machines.
In another move, the GST Council has also approved the operationalisation of The Goods and Services Tax Appellate Tribunal (GSTAT).
The GSTAT will be made operational for accepting appeals before the end of September and will commence hearing before the end of December this year. The Council also recommended the date of June 30, 2026, for limitation of filing of backlog appeals.
The Principal Bench of the GSTAT will also serve as the National Appellate Authority for Advance Ruling.
The GST Council in a statement has said that these measures will significantly strengthen the institutional framework of GST by providing a robust mechanism for dispute resolution, ensuring consistency in advance rulings, and offering greater certainty to taxpayers. This will further enhance trust, transparency, and ease of doing business under the GST regime.
Meanwhile, the food industry has welcomed the decision by the GST Council, and called it a remarkable achievement in policy reform in the last many decades.
The AIFPA representing the entire food processing sector, which has been in forefront of the discussions and deliberations on the GST reforms for the past 8 years with the authorities, has welcomed the move and called it an overall win-win situation for the industry, consumers, farmers and the entire value addition chain.
Dr. Subodh Jindal, chairman, taxation, and past president, AIFPA, has said that this decision of the GST Council has given handouts to all the stakeholders.
“The GST Council has truly honoured our request for rationalisation of the tax structure for the food industry,” said Jindal.
Jindal added that this would enhance the purchasing power of common people and add buoyancy to the economy.
The Indian Ice Cream Manufacturers’ Association (IICMA) also welcomed the decision and called it a landmark decision with GST Reduction for Ice Cream Industry to 5%.
“IICMA is grateful to the Government for this much-awaited relief. The reduction in GST will not only ease the burden on businesses but will also pave the way for greater innovation, expansion, and growth in the sector,” said Sudhir Shah, president, IICMA.
Industry body FICCI hailed the decisions taken at the 56th GST Council Meeting, and called it a transformative step in India’s economic journey and ushering in next-generation GST reforms.
In a statement, FICCI said that the rationalisation of GST rates into a simplified two-tier structure (18% and 5%), with a special de-merit rate for select goods, is a consumer focussed and growth-oriented reform that will bring transparency, predictability, and stability to India’s tax system. It will directly benefit households, labour-intensive industries, MSMEs, and critical sectors such as healthcare, agriculture, infrastructure, and automobiles—reducing costs for consumers, providing relief to businesses, and boosting consumption-driven growth.
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