Economy

Major GST Overhaul Simplifies Tax Structure to Two Slabs

Sep 3, 2025 · By PIB Delhi

The Indian government has announced a major overhaul of the Goods and Services Tax (GST) system, moving to a simpler two-rate structure of 5% and 18%. This significant reform is expected to lower the tax burden on consumers for many essential goods and simplify tax compliance for businesses across the country.

Major GST Overhaul Simplifies Tax Structure to Two Slabs

In a significant move, the GST Council has announced a comprehensive reform of the Goods and Services Tax, streamlining the existing multi-slab structure into two primary rates of 5% and 18%, with a higher rate for demerit goods.

The GST Council has approved a landmark reform package that simplifies the Goods and Services Tax regime by introducing a two-slab structure. The new system will primarily feature a 5% rate for essential items and an 18% standard rate for most other goods and services, eliminating the 12% and 28% slabs. A separate demerit rate will be applicable to luxury and sin goods. This move is aimed at making the tax system more transparent, reducing compliance burdens, and boosting consumption. Key changes include a reduction in GST on household essentials like soaps and toothpaste to 5%, and on items like two-wheelers, small cars, and televisions to 18%. The revised rates are set to be effective from September 22, 2025.

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Major GST Overhaul Simplifies Tax Structure to Two Slabs

In a significant move, the GST Council has announced a comprehensive reform of the Goods and Services Tax, streamlining the existing multi-slab structure into two primary rates of 5% and 18%, with a higher rate for demerit goods.

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