In a landmark decision, the GST Council, during its 56th meeting, has approved a massive overhaul of India's indirect tax system. The new structure will scrap the existing 12% and 28% tax slabs, leaving only a streamlined two-slab system of 5% and 18%. This change is set to take effect on September 22, 2025.

The historic meeting, which lasted over 10 hours, was aimed at easing the tax burden on the common citizen, simplifying processes for businesses, and making the country’s tax system more efficient. The move is expected to significantly reduce product prices and simplify tax compliance for traders.

Union Finance Minister Nirmala Sitharaman announced that the new rate structure will apply to all goods and services, with the exception of tobacco and tobacco products. These reforms, set to be implemented from the first day of Navaratri, have received support from representatives of all 31 states and union territories.

A separate 40% demerit tax will continue to apply to super-luxury and "sin" goods. Read Also: GST Council's 56th Meeting: A Pre-Diwali Gift for Consumers?

The new simplified tax structure is expected to lower production costs, decrease market prices for goods, and provide significant financial relief to consumers. Additionally, the Council's decision to implement an automatic refund system and a simplified registration process will create a more favorable business environment.

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This major reform, eight years after the implementation of GST, is seen as a crucial step towards creating a more stable and predictable tax regime, boosting economic growth, and improving the ease of doing business in India.

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