In a landmark overhaul of India's indirect tax system, the GST Council has approved a new two-slab structure, scrapping the 12% and 28% rates in favour of a simplified 5% and 18% framework. The reforms, effective from 22 September, also introduce a 40% demerit rate for super luxury, sin, and demerit goods. Chaired by Finance Minister Nirmala Sitharaman, this aimed to lower the tax burden on common people and reduce class disputes thereby benefiting the citizens and enhancing the ease of doing business.

The sweeping rate cuts will make numerous items cheaper. Individual life and health insurance policies are now fully exempt from GST. Many daily-use items, including hair oil, soap, toothpaste, and packaged snacks like namkeens, will move from 12% or 18% to the 5% slab. White goods like air conditioners and televisions, along with small cars and motorcycles, will now be taxed at 18% instead of 28%. Services at gyms, salons, and yoga centres will also become cheaper, with their GST rate cut to 5%.

Conversely, the new 40% demerit slab will increase prices for tobacco products, bigger cars, and all goods containing added sugar or sweeteners, such as aerated drinks. The reforms also correct the long-pending inverted duty structure for the textile and fertiliser sectors. The government estimates a net revenue implication of ₹48,000 crore, while the Confederation of Indian Industry (CII) has welcomed the "pathbreaking" move, promising to pass on the benefits to consumers.