The Goods and Services Tax (GST) Council has taken a big step in simplifying India’s indirect tax system. After a marathon 56th meeting in New Delhi, Finance Minister Nirmala Sitharaman announced that the four-slab system will now be reduced to just two rates — 5% and 18%, effective from September 22.
“We’ve reduced the slabs. There shall be only two slabs, and we are also addressing the issues of compensation cess,” Sitharaman said, stressing that the reforms are designed to directly benefit the common man.
She added that items of daily use were put through rigorous review, and in
“most cases, the rates have come down drastically.”
The changes come at a time when GST revenue in September registered a 26% jump compared to the same month last year, showing both higher compliance and stronger consumption.
What’s Cheaper Now?
0% GST
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33 essential life-saving drugs, including cancer and rare-disease medication
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Individual life and health insurance policies
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Educational items like maps, globes, pencils, crayons, erasers, and notebooks
5% GST
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Daily-use products: hair oil, shampoo, toothpaste, toothbrush, soaps, shaving cream
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Dairy and food: butter, ghee, cheese, namkeens
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Household: utensils, feeding bottles, napkins, diapers
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Medical essentials: thermometers, diagnostic kits, oxygen, glucometers
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Corrective spectacles
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Sewing machines and parts
What Will Still Cost More?
18% GST
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Consumer durables: ACs, TVs, dishwashers
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Automobiles: small cars, bikes below 350cc, buses, trucks, ambulances
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Auto parts and three-wheelers
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Cement
40% GST (Demerit Goods + Cess)
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Tobacco products: cigarettes, gutka, pan masala, bidis
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Sugary and caffeinated beverages
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Luxury items: motorcycles above 350cc, yachts
Why This Matters
The GST reform is more than just a rate cut. It signals the government’s attempt to simplify compliance, boost consumer demand, and balance state revenues. While households will feel relief on essentials, states like West Bengal have already warned of a potential ₹47,700 crore revenue shortfall.
Still, the larger message is clear — the government is betting on higher consumption and wider compliance to make up for revenue losses.
For the average Indian, this means cheaper groceries, medicines, and daily-use items, but luxury purchases and “sin goods” remain firmly in the high-tax bracket.
