Paneer to all varieties of Indian bread will attract nil GST: Nirmala Sitharaman on 2-slab GST structure
Paneer to all varieties of Indian bread will attract nil GST: Nirmala Sitharaman on 2-slab GST structure
Addressing the media after the meeting, Sitharaman said the Council had reduced the number of slabs and GST on air conditioners, televisions, dishwashers, small cars, and motorcycles under 350cc has been cut from 28% to 18%.
Karishma Asoodani
- Sep 3, 2025,
- Updated Sep 3, 2025 10:32 PM IST
The Goods and Services Tax (GST) Council, chaired by Union Finance Minister Nirmala Sitharaman, has approved significant changes to the GST rate structure aimed at simplifying compliance, rationalising tax slabs, and providing relief to households, the middle class, and businesses.
Addressing the media after the meeting, Sitharaman said the Council had reduced the number of slabs and was also reviewing the issue of compensation to states. Among the key decisions, the GST on UHT milk, paneer chenna, all types of Indian breads, and parathas has been cut from 5% to nil.
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She further announced that hair oil, toilet soaps, shampoos, toothbrushes, tableware, and kitchenware will now attract a 5% GST.
She added that GST on air conditioners, televisions, dishwashers, small cars, and motorcycles under 350cc has been cut from 28% to 18%.
She further said a special 40% rate will apply to so-called "sin goods", such as tobacco, pan masala, gutkha, and cigarettes.
FM Sitharaman said all cars with engines under 1,200 cc and motorcycles below 350 cc will now attract 18% GST.
She added that the government is addressing the inverted duty structure in the fertiliser sector by reducing GST on sulphuric acid (H₂SO₄) and ammonium.
Announcing a series of rate cuts, the Minister said soil harvesting, fodder, and composting machines will be taxed at 5% instead of 12%. Similarly, GST on 12 specified biopesticides and natural menthol has been cut from 12% to 5%.
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Handicrafts, marble, granite blocks, and intermediate leather goods have also been moved to the 5% slab.
Spectacles and goggles for vision correction will now attract 5% GST, a sharp drop from the earlier 28%.
The Council also reduced the GST rate on buses, trucks, ambulances, and three-wheelers from 28% to 18%.
Cement will now attract 18% GST, down from the earlier 28%.
Besides, in a major relief for patients, 33 life-saving drugs and essential medicines have also been exempted from GST, moving from the 12% slab to nil.
Implementation timeline
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The GST Council set September 22, 2025, as the date for rolling out most of the changes. However, the transition will be phased:
Services: New GST rates effective from September 22, 2025.
Goods (except tobacco and allied products): Revised rates to be implemented from September 22, 2025.
Tobacco and related products: Existing GST and cess rates will continue until all loan and interest payment obligations under the compensation cess account are fully met. The actual date of transition for these goods will be decided later by the Union Finance Minister.
The Council also directed the Central Board of Indirect Taxes and Customs (CBIC) to begin administrative implementation of a revised refund system. Under this, 90% provisional refunds arising out of the inverted duty structure will be granted based on risk evaluation and data analysis—similar to the system currently used for zero-rated supplies.
The Goods and Services Tax (GST) Council, chaired by Union Finance Minister Nirmala Sitharaman, has approved significant changes to the GST rate structure aimed at simplifying compliance, rationalising tax slabs, and providing relief to households, the middle class, and businesses.
Addressing the media after the meeting, Sitharaman said the Council had reduced the number of slabs and was also reviewing the issue of compensation to states. Among the key decisions, the GST on UHT milk, paneer chenna, all types of Indian breads, and parathas has been cut from 5% to nil.
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She further announced that hair oil, toilet soaps, shampoos, toothbrushes, tableware, and kitchenware will now attract a 5% GST.
She added that GST on air conditioners, televisions, dishwashers, small cars, and motorcycles under 350cc has been cut from 28% to 18%.
She further said a special 40% rate will apply to so-called "sin goods", such as tobacco, pan masala, gutkha, and cigarettes.
FM Sitharaman said all cars with engines under 1,200 cc and motorcycles below 350 cc will now attract 18% GST.
She added that the government is addressing the inverted duty structure in the fertiliser sector by reducing GST on sulphuric acid (H₂SO₄) and ammonium.
Announcing a series of rate cuts, the Minister said soil harvesting, fodder, and composting machines will be taxed at 5% instead of 12%. Similarly, GST on 12 specified biopesticides and natural menthol has been cut from 12% to 5%.
Advertisement
Handicrafts, marble, granite blocks, and intermediate leather goods have also been moved to the 5% slab.
Spectacles and goggles for vision correction will now attract 5% GST, a sharp drop from the earlier 28%.
The Council also reduced the GST rate on buses, trucks, ambulances, and three-wheelers from 28% to 18%.
Cement will now attract 18% GST, down from the earlier 28%.
Besides, in a major relief for patients, 33 life-saving drugs and essential medicines have also been exempted from GST, moving from the 12% slab to nil.
Implementation timeline
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The GST Council set September 22, 2025, as the date for rolling out most of the changes. However, the transition will be phased:
Services: New GST rates effective from September 22, 2025.
Goods (except tobacco and allied products): Revised rates to be implemented from September 22, 2025.
Tobacco and related products: Existing GST and cess rates will continue until all loan and interest payment obligations under the compensation cess account are fully met. The actual date of transition for these goods will be decided later by the Union Finance Minister.
The Council also directed the Central Board of Indirect Taxes and Customs (CBIC) to begin administrative implementation of a revised refund system. Under this, 90% provisional refunds arising out of the inverted duty structure will be granted based on risk evaluation and data analysis—similar to the system currently used for zero-rated supplies.
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