Major Decisions of GST Council Meeting held on September 3, 2025
Major Decisions of GST Council Meeting held on September 3, 2025
Goods and Services Tax (GST) Council meeting, the 56th session held on September 3, 2025, approved a major revamp of the tax structure.
Key decisions include a two-tiered slab system, higher rates on “sin goods,” and a host of changes aimed at simplification for taxpayers.
GST rate rationalization
The council approved a new rate structure to be implemented from September 22, 2025, consolidating the existing system into fewer slabs.
Two-tiered structure: The former 12% and 28% tax slabs were eliminated, with most goods moving to a new two-slab system of 5% and 18%.
“Sin goods” and luxury items: A new, higher 40% rate will apply to items such as tobacco, pan masala, and luxury vehicles priced over ₹50 lakh. An additional tax may also be imposed on these goods.
Cheaper household items: Daily essentials like toothpaste, soaps, and hair oil will move to the lower 5% slab from the previous 18%. Other items like ghee, nuts, and certain packaged foods will also see a rate reduction.
Electronics and consumer durables: Items such as televisions, washing machines, and refrigerators, which were previously taxed at 28%, will move to the 18% slab, potentially lowering prices.
Apparel and footwear: The threshold for the 5% tax slab was increased to ₹2,500 from ₹1,000. Apparel and footwear costing above ₹2,500 will move to the 18% slab.
Electric vehicles (EVs): While the Centre proposed a 5% rate, the council approved an 18% GST on premium EVs priced up to ₹40 lakh. Luxury EVs may fall under the new 40% rate.
Compliance and administrative changes
The council also approved measures to simplify the tax framework and improve administrative efficiency.
Faster refunds: The GST Network (GSTN) introduced system enhancements to expedite refunds for exporters and those claiming refunds based on assessment orders.
Biometric authentication: A nationwide rollout of Aadhaar-based biometric authentication for GST registration was approved to combat fraudulent input tax credit claims.
Invoice Management System (IMS): Enhancements to the existing return system include the introduction of IMS, which allows taxpayers to manage invoices for input tax credit purposes.
Key deferred discussions:
Some crucial topics were discussed but decisions were postponed for future meetings.
Compensation cess: The council noted that compensation cess collections are expected to be sufficient to repay GST compensation loans to states by October 31, 2025. However, no decision was made on an alternative revenue-sharing mechanism for states after the cess ends.
Online food delivery: Deliberations on the tax rates for online food delivery services were pushed to the next meeting.
Petrol and diesel: While the Finance Minister reiterated that the Centre is open to including petrol and diesel under GST, no discussions took place during the meeting.
Team- Intellex Strategic Consulting Private Limited
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