On 15th August 2025, Prime Minister Shri Narendra Modi announced a historic wave of next-generation GST reforms from the ramparts of the Red Fort. These reforms mark a citizen-centric and business-friendly evolution of India’s tax framework, designed to simplify the system, reduce burdens, and improve the quality of life for every citizen.
The GST Council has approved wide-ranging measures with a focus on:
The common man
Farmers and agriculture
Labour-intensive industries
Healthcare
Ease of doing business, especially for small traders
Key Highlights of GST Reforms
1. Insurance Becomes Affordable
100% GST exemption on all individual life insurance policies – including term plans, ULIPs, and endowment policies.
GST exemption on all health insurance policies (family floater and senior citizen policies included).
👉 This move will make insurance affordable and accessible, helping boost coverage across India.
2. Simpler Tax Structure
Transition from a 4-tier GST structure to a 2-rate ‘Simple Tax’ system:
5% (Merit Rate)
18% (Standard Rate)
40% (De-Merit Rate) for select goods and services
👉 This reform will reduce complexity and make compliance easier.
3. Relief on Essential Items
GST reduced from 18%/12% → 5% on items like hair oil, soaps, shampoos, toothbrushes, toothpaste, bicycles, tableware, kitchenware, etc.
GST reduced from 5% → NIL on UHT milk, paneer, and all Indian breads (roti, chapati, paratha, parotta).
Food items like namkeens, pasta, noodles, chocolates, sauces, butter, ghee, coffee, and preserved meat now at 5% instead of 12%/18%.
👉 Essential household and food products will now cost much less.
4. Focus on Farmers & Labour-Intensive Sectors
GST reduced from 12% → 5% on agricultural machinery (tractors, harvesters, threshers, composting machines).
GST reduced from 12% → 5% on handicrafts, leather goods, marble, granite, and other labour-intensive items.
Man-made textile correction:
Fibre → 18% → 5%
Yarn → 12% → 5%
Fertilizers: GST on sulphuric acid, nitric acid, and ammonia cut from 18% → 5%.
5. Big Boost for Healthcare
33 life-saving medicines (12% → NIL).
3 rare-disease/cancer medicines (5% → NIL).
Other medicines cut from 12% → 5%.
Medical devices like glucometers, diagnostic kits, and bandages reduced from 12% → 5%.
Larger equipment like surgical/dental apparatus cut from 18% → 5%.
👉 Healthcare becomes affordable for all.
6. Automobiles & Transportation
GST cut from 28% → 18% on:
Small cars
Motorcycles ≤350cc
Air-conditioners
Washing machines
TVs (all sizes, now at 18%)
Dishwashers
Buses, trucks, and ambulances: 28% → 18%.
Uniform 18% rate on auto parts (earlier multiple slabs).
Three-wheelers: 28% → 18%.
7. Real Estate & Construction
Cement: GST reduced from 28% → 18%, giving a boost to infrastructure and housing affordability.
8. Tourism & Services
Hotel rooms up to ₹7,500/day: 12% → 5%.
Salons, gyms, barbers, and yoga services: 18% → 5%.
9. Green Energy Push
Renewable energy devices and parts: 12% → 5%.
10. Stronger Dispute Resolution
Goods and Services Tax Appellate Tribunal (GSTAT) to be operational by September 2025.
Hearings to begin by December 2025 for quicker resolution of disputes.
The next-generation GST reforms represent one of the most significant overhauls since GST’s inception in 2017. By lowering tax rates on essentials, healthcare, agriculture, and labour-intensive goods, while simplifying compliance, these reforms aim to:
Ease the financial burden on citizens
Boost industries and agriculture
Make healthcare and insurance affordable
Encourage investments and growth
In short, these reforms bring GST closer to being a true “Good and Simple Tax”.