The Goods and Services Tax (GST) was introduced in India on July 1, 2017, with the aim of efficiently streamlining the indirect tax system in the nation. Nevertheless, the effects of GST on the Indian economy and the average citizen have been a topic of ongoing discussion. It is undoubtedly true that GST has organized the taxation policy within the country. Currently, the government is reforming GST to specifically aid the ordinary citizen by significantly reducing rates on essential items and simplifying the tax framework. The revised GST rates will come into effect on September 22nd.

Outline of GST Reform

Finance Minister Nirmala Sitharaman announced that the GST on items used by the general public and middle-class families has been cut from 18 or 12  to 5 percent. The Finance Minister mentioned that products like hair oil, toilet soap, soap bars, shampoos, toothbrushes, toothpaste, bicycles, tableware, kitchenware, and other household goods will now only incur a 5 percent GST.

Additionally, she stated that the GST on ultra-high temperature milk, chena, and paneer has been reduced to zero from 5 percent, while all Indian breads will now announced that products such as hair oil, toilet soap, soap bars, shampoos, toothbrushes, toothpaste, bicycles, tableware, kitchenware, and other household goods will now e subject to a zero rate.  Sitharaman also revealed that the GST on food items, including namkeen, bhujia, sauces, pasta, instant noodles, chocolates, coffee, preserved meat, cornflakes, butter, and ghee, has been lowered from 12 percent or 18 to 5 percent.

The Minister further stated that the GST rates on items such as air-conditioning units, televisions over 32 inches, all types of TVs, dishwashing machines, small cars, and motorcycles have been brought down to 18 from 28 percent. She emphasized that labor-intensive industries are showing substantial support, and farmers, along with the agricultural sector, will also reap benefits from the decisions made. The Minister noted that the GST on all agricultural machinery has been reduced from 12 to 5 percent.

For the automotive sector:

The GST has been lowered from 28 to 18 percent for small cars and motorcycles with an engine size of up to 350 cc. 

The tax on buses, trucks, and ambulances has also been decreased from 28 to 18 percent. 

A uniform GST rate of 18 percent is now applied to all auto parts. 

For three-wheelers, the GST has been reduced from 28 to 18 percent.

GST reduction on health-related items:

The GST on 33 essential medications and life-saving drugs has been lowered from 12 to 0 percent.  

The GST on three critical drugs for treating cancer, rare diseases, and other serious chronic conditions has been decreased from 5 percent to 0 percent.  

Several pharmaceuticals and medications have seen their GST reduced from 12 percent to 5 percent.

To make insurance affordable for the common man and increase the insurance coverage in the country:

Exemption of GST on all individual life insurance policies, whether term life, ULIP, or endowment policies, and reinsurance.

GST exemption applies to all individual health insurance plans, including family floater options, senior citizen policies, and reinsurance.

The Finance Minister highlighted that Prime Minister Narendra Modi has laid the groundwork for future tax reforms, ensuring timely benefits for citizens. She noted that the government has tackled concerns regarding the inverted duty structure, addressed classification issues, and provided greater stability and predictability within the GST system.

Industry Voice

Anurag Sharma, Managing Director and CEO, AKAI India says, “The new GST rate cut from 28 to 18 percent is a progressive reform as it will make electronic items like televisions, air-conditioners, and other appliances significantly more affordable for millions of Indian households. The 18 percent GST bracket enables consumers to save around Rs.. 3000 to 5000 on major appliances and encourages them to fulfil their needs this festive season. This bold step will boost customer demand in tier II and III cities, essentially. The new GST rate cuts will also empower the entire electronics industry and fuel its momentum. Additionally, the industry will be able to enjoy faster transit times across state borders, enhanced overall operational efficiency, and reduced logistics costs.”

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Anand Chandra, Co-Founder & Executive Director, Arya.ag says, “This is a welcome step that brings direct relief to farmers. Lower GST on machinery, tractors, and agri inputs makes essential tools more affordable and helps farmers keep more of their earnings. For smallholders, in particular, this can make a real difference by reducing upfront costs and encouraging greater use of efficient, modern equipment.”

“At Arya.ag, we work with farmers across the country and see how small shifts in cost structures can influence decision-making. When inputs are priced right and income potential improves, farmers are more confident to invest in their fields. That confidence feeds into better outcomes for productivity and income stability.”

“A move like this also supports the broader agri ecosystem. It makes farming more viable, strengthens rural demand, and creates more predictable conditions for businesses that serve farmers. The sector grows when policies respond to on-ground realities, and this one does. It will be important now to ensure that awareness reaches the last mile so farmers across regions can take advantage of these changes. The benefits are clear, and this move can support growth across the agricultural value chain." Please find the attached image of Anand Chandra for your reference.”

Anil Pandey, Project Director – REPL says, “The GST Council's decision to rationalize tax slabs and reduce rates on primary construction materials such as cement is not just crucial, it was also overdue. It simplifies one of the many persistent cost challenges of the real estate sector, especially in the affordable and mid-income housing segments. By lowering tax rates on the core materials, developers will be able to modify their pricing strategies, which in turn, will greatly enhance affordability for the end users. These users will gain better accessibility to the materials without having to compromise on quality.”

“The consequences and effects on construction projects are impactful as well. Lowering core material costs gives capital the potential to enable faster recovery cycles, which greatly accelerates execution timelines and allows public and private players to optimize capital deployment. Multiple large scale infrastructure initiatives, including roads, urban utilities, and/or collaboration transit corridors, will greatly benefit from better financial construction and planning, as well as faster and cost effective rollouts.”

“All in all, this decision will greatly enhance the cross-silo efficiencies and predictability in the entire built regime. It is the right step in the right direction, and it removes the persistent inefficiencies to the system, while providing support and unlocking the growing desired demand.”

CA K Ravi Senior Vice President BCIC says, “The proposed GST revision is expected to benefit large, medium, and MSME sectors by increasing production capacities, improving competitiveness, and enhancing their overall growth prospects. This will enable them to expand their operations, invest in new technologies, and explore new markets. With increased economic activity, businesses are likely to create more jobs, contributing to the overall growth and development of the economy.

The simplification of the GST procedures will help in ease of doing business.”

“The exemption of individual life and health insurance from GST will greatly benefit every citizen. By reducing GST rates on everyday items and critical inputs, the reforms provide great relief to consumers."

 

"The rationalization of GST rates on automotive vehicles and parts is a truly welcome and a good development thereby making vehicles more affordable across all segments. Cement is a key input for infrastructure and housing, reduction in GST rates will boost consumption and support projects from affordable housing to large-scale infrastructure.”

GST Revisions a Welcome Boost for Higher Education and Research

Prof. Debabrata Das, Director, IIIT-Bangalore says, “The recent GST revisions mark a progressive step forward for the higher education sector. The reduction of GST on the import of critical goods—from 18 to 5 percent —will have a transformative effect on institutional budgets and research capacities. Beyond conventional items like lab equipment, LED monitors, and projectors, this reduction now extends to advanced technologies such as drones, high-performance batteries for drones, and communication devices including software-defined radios. For universities and research centres, these are not just tools but gateways to frontier innovation in areas such as agriculture, disaster management, defence studies, and digital communications, etc. Lowering their acquisition cost will accelerate interdisciplinary research and expand opportunities for experiential learning.”

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“Equally noteworthy are the exemptions announced for health and life insurance. Institutions are responsible for safeguarding the welfare of large student and staff populations, and any relief on insurance costs allows for broader coverage and more robust welfare schemes without imposing additional financial strain. Another welcome measure is the reduction of GST from 12 percent  to Nil on exercise books, notebooks, and key stationery items. For students and their families, this translates into immediate savings on day-to-day educational expenses, reinforcing the government’s intent to make learning more accessible and affordable.”

“Taken together, these reforms signal a strong recognition by policymakers of the dual priorities in education: affordability for students and research advancement for institutions. By easing the financial burden on essential educational and research infrastructure, the government has opened the door for universities to invest more aggressively in innovation, skill development, and knowledge creation—areas that will define India’s global competitiveness in the years ahead.”

Usha Iyer, Founder Director, The Bangalore School & The Green School Bangalore says, “The GST Council, chaired by Finance Minister Nirmala Sitharaman, has announced a sweeping simplification of GST slabs—condensing multiple rates into just two (5 and 18 percent), effective September 22, 2025   More importantly for education, it has eliminated GST on key stationery items: pencils, sharpeners, crayons, exercise books, notebooks, maps, atlases, globes, and erasers—items previously taxed at 5–12 percent —making them completely tax-free 

For me, the GST revision on educational products is more than just a tax cut—it is a signal. When pencils, notebooks, and maps are made GST-free, the government is saying education must start with accessibility. But the real debate is—will this ripple into real impact inside our classrooms?

“Will it ease the burden for parents? Will schools truly feel the difference in their operating costs? Or is this more symbolic than substantial?”

“As educators, we must look at this decision closely. If affordability is the first step, quality is the next. Making learning tools tax-free is a bold move, yes—but the larger question is, can this momentum translate into investing in teachers, infrastructure, and the real fabric of learning? This GST reform opens the door. What we do with it, as institutions and teachers, will decide whether it becomes history-making or just headline-making.”