GST Bachat Utsav Begins! Major Rate Cuts and Simplified Slabs from Today
The GST reforms discussed in the 56th GST Council meeting held on September 3-4, 2025, have been made effective from today, September 22, 2025. These amendments in GST rates have significantly cut the overall price of goods and services and have brought structural changes in the country.
On Sunday, Prime Minister Shri Narendra Modi addressed the rollout as the beginning of a “bachat utsav” (saving festival) for the dwellers of the country. He said, “From tomorrow in the nation, ‘GST bachat utsav’ will commence. Your savings will increase, and you will be able to buy your favourite things. ‘GST Bachat Utsav’ will benefit all sections of society.”
He further said the implemented changes will further facilitate the compliance process, lead to an increase in investments, and ensure every state is contributing equally in the development journey of the country.
GST reforms from September 22: Glimpses
- Reduction in GST Slabs: The GST council has reduced the number of GST slabs from four (5 per cent, 12 per cent, 18 per cent, and 28 per cent) to two (5 per cent and 18 per cent). However, an additional slab of 40% has been levied on sin goods and luxury items.
- Exemption on Life and Health Insurance: The GST council has fully exempted GST on all life insurance and family health insurance policies. Life insurance policies include term plans, endowment, and Unit Link Insurance Plan (ULIP), and family health insurance policies include coverage for senior citizens.
- Passenger Transport Rates: GST of 5% has been imposed on road transport services, without Input Tax Credit (ITC). However, there is still an option to pay 18 per cent with ITC. However, GST rates remain unchanged on air travel, i.e., 5% on economic class and 18% on business class.
- GST Imposition on Local Delivery Services: In any case, if unregistered vendors provide delivery services through e-commerce operators, the tax liability will shift to the operator. Those who are registered vendors will have to pay GST by themselves only.
- GST on Delivery Services: GST of 18% has been levied on all local delivery services.
- Medicines Not Fully Exempt from GST: The Finance Ministry has notified that GST will not be fully exempted on medicines and will continue to attract 5%. The reason behind this is that full exemption on medicines will prevent manufacturers from claiming ITC on inputs, ultimately leading to an increase in the price of production.
- Dairy Products: Dairy products like milk, paneer, curd, etc., have now been fully exempted from GST. However, plant-based milk (including soy and almond milk) will now attract 5% GST.
- Rate Cuts on Cosmetics: The government has reduced the GST rate on cosmetic products.
