The government is considering major reforms at the upcoming GST Council meeting (September 3-4, 2025). This includes a proposal to bring branded sweets, food products, and clothing into the 5% tax slab. The GST on cement could be reduced from 28% to 18%. Consumers are likely to get relief if implemented before Diwali.
New Delhi: In a major step towards GST reform, the central government is preparing to bring several everyday items, including clothing, food products, and sweets, into the 5% tax slab. Following Prime Minister Narendra Modi's Independence Day speech, a proposal to eliminate the 12% and 28% slabs has been approved at a Group of Ministers meeting in Delhi. Now, the GST Council meeting, chaired by Finance Minister Nirmala Sitharaman on September 3-4, is expected to make a final decision on this. The government aims to implement the new rates before Dussehra-Diwali, providing direct relief to consumers and businesses.
Proposal to Reduce Tax on Clothing and Food Products
The government is considering bringing textiles and food products into the 5 percent slab. Previously, the proposal to eliminate the 12 percent and 28 percent slabs had been approved at the Group of Ministers meeting. This will reduce the tax burden on the common man and provide direct relief to consumers.
Discussion on Cement and Other Goods Too
Under the GST Reforms, reducing tax rates on several other essential items, including cement, is also under consideration. Currently, small salons are GST-free, but mid and high category salons are subject to an 18 percent tax. Additionally, the government is also considering a GST reduction plan on commonly consumed services such as salon services and beauty parlors.
Potential Changes to Cars, Insurance, and Assurance
According to sources, maintaining the 18 percent GST slab for small cars up to 4 meters in length and 40 percent for larger cars is being considered. In addition, there is a possibility of eliminating GST on term insurance and health insurance policies. This could directly reduce the cost of insurance services.
Current Slab Overview
Currently, the applicable GST rate on sweets and clothing varies. Unbranded sweets are subject to a 5 percent tax, while branded and packaged sweets fall into the 18 percent slab. Carbonated drinks are also included in this slab. GST on clothing ranges from 5 to 12 percent based on price. A 5 percent tax is applicable on clothing priced at ₹1000 or less, and a 12 percent tax is applied to clothing priced higher.
When Could the Next Meeting Be?
The 56th meeting of the GST Council is proposed to be held on September 3 and 4, 2025, in New Delhi. The meeting, chaired by Finance Minister Nirmala Sitharaman, will begin at 11 am. Prior to this, discussions will be held with officials from the GST Secretariat on September 2. Final decisions on the new slabs and potential changes will be made at the meeting.
Relief Expected Before Diwali
The government's goal is to have the new rates implemented by the time of Dussehra-Diwali. This year, Diwali will be celebrated on October 21. If the GST reforms are implemented on time, consumers will have to pay less tax on sweets, clothing, food products, and other services.
Prime Minister's Message
Prime Minister Narendra Modi said in his Independence Day speech that the next generation GST reform will reduce the tax burden for the common man. Not only the general consumer, but the business sector can also see benefits from this reform.
The new GST structure is expected to reduce prices in textiles, food, salon and beauty services. If the proposal is approved, it will prove to be a major gift of relief to the general public during the festive season.
