CBIC assures smooth, timely rollout of new GST regime from September 22

The Central Board of Indirect Taxes and Customs (CBIC) on Thursday said it is working closely with industry players to ensure a glitch-free transition to the revamped Goods and Services Tax (GST) structure that takes effect from September 22, the first day of Navratri.

CBIC Chairman Sanjay Agarwal, addressing concerns about readiness, said the tax department has already begun coordinating with businesses and software providers to upgrade back-end systems in time for the rollout. “We are confident of a seamless transition to the new GST framework. Industry has been given two weeks to align their IT systems, accounting platforms, and compliance modules. Our teams are on standby to address any teething issues,” Agarwal said.

The GST Council, chaired by Union Finance Minister Nirmala Sitharaman, approved the most sweeping reset of the indirect tax system since its launch eight years ago. At its 56th meeting on Wednesday, which ran for more than 10 hours, the Council gave the green light for a simplified two-slab system—5% and 18%—with a separate 40% demerit slab for ultra-luxury, sin, and demerit goods such as tobacco, high-end cars, and gambling.

With the latest reforms, the GST Council has dismantled the earlier four-slab structure of 5%, 12%, 18% and 28%, replacing it with a simpler two-tier system: a merit rate of 5% and a standard rate of 18%. A higher 40% slab will apply only to super luxury, sin and demerit goods such as pan masala, tobacco and cigarettes.

The Council also approved sweeping rate cuts across everyday consumption items. Packaged foods like fruit juices, butter, cheese, condensed milk, pasta, coconut water, soya milk drinks, nuts, dates and sausages will now face lower levies, with some items such as ultra-high temperature milk, paneer, pizza bread, khakra, plain chapati and school-use items like erasers becoming fully GST-exempt. Medical essentials, including medical-grade oxygen, gauze, bandages and diagnostic kits, have been reduced to 5% from 12%.

Other mass-use goods such as hair oil, soap, shampoo, toothbrushes, toothpaste, bicycles, tableware, kitchenware and other household articles have also seen rates cut to 5% from 12–18%.

White goods too will be cheaper, with air conditioners, televisions, dishwashers and similar durables moved down to the 18% slab from 28%. Small cars—defined as petrol vehicles with engines up to 1200 cc and diesel vehicles up to 1500 cc with length under 4 metres—will now attract only 18% GST. Motorcycles under 350 cc and all auto parts will also come under 18%. Larger cars and SUVs, however, will be taxed at the top 40% slab. GST on electric vehicles remains unchanged at 5%.

Insurance has received a major relief, with all individual life and health insurance products—term plans, ULIPs, endowment policies, family floaters and senior citizen covers—made fully GST-exempt. Common wellness services such as gyms, salons, barber shops and yoga centres will now be taxed at just 5%, down from 18%.