The 56th meeting of the GST Council held on September 3, 2025 in New Delhi under Finance Minister Nirmala Sitharaman's chairpersonship approved a landmark two-tier GST rate structure of 5% and 18%, replacing the previous four-tier system of 5%, 12%, 18%, and 28%. A new 40% demerit slab was introduced for tobacco and luxury items. The reform will make 175 items cheaper including processed foods, dry fruits, dairy, packaged snacks, refrigerators, ACs, automobiles, and tractors. Average GST incidence is expected to drop from 11.5% to below 10%. UHT milk, pre-packaged paneer, and all Indian breads were revised to NIL rate. CBIC issued notifications on September 17, with most rate changes effective from September 22, 2025.
56th GST Council Approves Landmark Two-Tier Rate Structure of 5% and 18%
AQuick answer
56th GST Council approves two-slab (5% & 18%) structure replacing four tiers; 175 items become cheaper from Sep 22.
Key facts
- 56th GST Council meeting on September 3, 2025 approved a landmark two-tier GST rate structure of 5% and 18%, replacing the previous four-tier system (5%, 12%, 18%, 28%)
- New 40% demerit slab introduced for tobacco and luxury items
- Reform makes 175 items cheaper including processed foods, dry fruits, dairy, packaged snacks, refrigerators, ACs, automobiles, and tractors
- Average GST incidence expected to drop from 11.5% to below 10%
- UHT milk, pre-packaged paneer, and all Indian breads revised to NIL rate; CBIC notifications issued September 17, most rate changes effective from September 22, 2025
Mains angle
Q: Examine the implications of the 56th GST Council's transition to a two-tier GST rate structure of 5% and 18% for India's consumption and fiscal landscape.
Answer (50 words):
On 3 September 2025, the 56th GST Council under Finance Minister Nirmala Sitharaman approved a two-tier structure of 5% and 18%, replacing four-tier slabs. A 40% demerit rate covers tobacco and luxury goods. 175 items became cheaper from 22 September, lowering average GST incidence from 11.5% below 10%.
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Frequently asked questions
What GST rate structure did the 56th GST Council approve in New Delhi?
At its 56th meeting on September 3, 2025 in New Delhi, the GST Council approved a two-tier GST rate structure of 5% and 18%.
Which GST rate system did the new two-tier structure replace?
It replaced the previous four-tier system of 5%, 12%, 18%, and 28%.
What new slab was introduced for tobacco and luxury items?
A new 40% demerit slab was introduced for tobacco and luxury items.
Which items were revised to NIL rate, and when were most rate changes set to take effect?
UHT milk, pre-packaged paneer, and all Indian breads were revised to NIL rate. CBIC issued notifications on September 17, with most rate changes effective from September 22, 2025.
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