The 56th GST Council meeting is slated for later this week, with a key focus on rationalising the existing GST rate structure. The Council is expected
to deliberate on reducing the number of tax slabs by potentially eliminating the 12 per cent and 28 per cent categories. Items may be merged into the 5 per cent and 18 per cent slabs, while a new 40 per cent slab could be introduced specifically for sin goods.
GST Council Meeting Date, Time and Place
The 56th GST Council Meeting is scheduled for September 3 and 4, 2025, in New Delhi, starting at 11:00 AM each day, as per the office memorandum issued by the GST Council on August 22.
Major Reforms in Focus
However, the upcoming GST Council meeting is being closely watched, as it carries significant expectations across various sectors. Here are the key areas to keep an eye on:
Automobile Sector: The small car segment can witness a potential reduction in the tax rate on small cars to 18 per cent. At present, small cars attract a base GST of 28 per cent, along with an additional cess that varies depending on whether the vehicle is petrol or diesel powered, bringing the effective tax rate to between 29 and 31 per cent.
Reducing GST on small cars to 18 per cent will lower prices by up to 10 per cent, making cars more affordable. This helps more people buy cars, especially first-timers and middle-class families. It also boosts car sales and supports car makers, making small cars more affordable and popular in India.
Consumer Goods and Electronics Sector: Goods and services are currently charged under a four-tier system with rates ranging from 5 per cent to 28 per cent. GST reform, proposed by the Centre, says that most goods will be charged at either 5 per cent or 18 per cent. Durables such as washing machines, air conditioners and refrigerators will be among the goods charged lower rates under the new GST regime.
Farming Sector: The GST on farming machinery may see a reduction, with tractors likely to move into the 5 per cent slab from the existing 12 per cent. Parts such as ploughs, seeders, transplanters and cultivators may also shift to the 5 per cent category.
Dairy Sector: The dairy sector is expected to mirror the trend seen in the farming sector, with dairy machinery likely to be moved to the lower 5 per cent GST slab.
Fishing and Seafood Sector: The fish and seafood sector in India is likely to attract a GST rate of 5% for processed or preserved fish and seafood products under the upcoming GST reforms.
New GST Reforms
Earlier this month, Prime Minister Narendra Modi said that the Centre has circulated the draft of the next-generation GST reforms among states and sought their cooperation to implement the proposal before Diwali.
Modi had announced the proposal to reform the GST law in his Independence Day speech on August 15 from the ramparts of the Red Fort.
A lower GST rate will boost demand and sales, as cars will become affordable. Thereby boosting consumption, a key idea behind the GST overhaul proposal mooted by the Centre.
What are sin goods?
As mentioned earlier, a new 40 per cent GST slab is likely to be introduced specifically for "sin goods." But what exactly qualifies as sin goods?
These typically include products considered harmful to health or society, such as tobacco and tobacco products (including cigarettes, pan masala, and gutka), aerated and caffeinated beverages, luxury cars, online gambling, and processed foods that are high in sugar, salt, and trans fats. The primary objective behind taxing these goods at a higher rate is to discourage their consumption while simultaneously boosting government revenue.
