Prime Minister Narendra Modi on Wednesday said that the GST Council has given its nod to sweeping reforms in the indirect tax regime, calling it a “next-generation” step to ease the burden on citizens and boost economic growth.
“The Union Government had prepared a detailed proposal for broad-based GST rate rationalisation and process reforms, aimed at ease of living for the common man and strengthening the economy,” Modi said in a post on X. He added that the Council, which includes both the Centre and the states, has “collectively agreed” to the proposals, which he said will benefit farmers, MSMEs, the middle class, women and youth.
During my Independence Day Speech, I had spoken about our intention to bring the Next-Generation reforms in GST.
The Union Government had prepared a detailed proposal for broad-based GST rate rationalisation and process reforms, aimed at ease of living for the common man and…
— Narendra Modi (@narendramodi) September 3, 2025
The reforms include a two-tier GST rate structure of 5 per cent and 18 per cent, set to take effect from September 22. Finance Minister Nirmala Sitharaman said the Council’s decision was driven by the need to support key drivers of the economy. Televisions will now attract an 18 per cent tax, while life-saving cancer drugs have been exempted from GST. The inverted duty structure will also be corrected, she noted.
On the other end, goods such as cigarettes and paan masala will attract the steepest tax rate of 40 per cent. The compensation cess on tobacco products will continue until loans taken under the GST compensation mechanism are repaid, Sitharaman said.
The decision came after a marathon 10.5-hour meeting – the 56th of the GST Council – where states and the Centre worked through contentious issues to finalise the new structure.
The reforms, Modi said, will not only reduce the tax burden on ordinary citizens but also simplify compliance for small traders and businesses, strengthening India’s promise of “ease of doing business.”
