The Goods and Services Tax (GST) Council has approved a fresh two-tier tax structure of 5 per cent and 18 per cent which will come into effect on September 22. Union Finance Minister Nirmala Sitharaman made the announcement after the 56th GST Council meeting on Wednesday, calling it a step towards simplifying the tax system and boosting consumer confidence. Almost all personal use items will see rate cuts as the government looks to boost domestic spending and cushion the economic blow of the US tariffs.
Relief on everyday essentials
From hair oil and corn flakes to televisions and household essentials, a wide range of commonly used products will now attract lower GST rates. The government aims to encourage domestic spending and soften the impact of US tariffs on the Indian economy. Almost all personal-use goods will see reduced rates, with the only exceptions being gutkha, tobacco and cigarette products.
Insurance premiums made tax free
The Council has also exempted all individual life and health insurance premiums from GST. At present, these services attract an 18 per cent levy. The exemption will apply to all categories of life insurance policies such as term life, ULIPs, and endowment plans, along with their reinsurance. Similarly, individual health insurance policies including family floaters and senior citizen covers will also fall under the zero GST bracket.
Affordable coverage for all
The Finance Minister highlighted that the move would make insurance services more affordable and accessible for the common man, while encouraging wider penetration of coverage across the country. Effective from the first day of Navratri, the change is expected to bring financial relief to millions of households, Sitharaman added.
GST exempted goods: Here's full list
Food & Agricultural Essentials
- Cereals: Wheat, rice, and other unprocessed grains
- Indian breads (Chapati or roti, paratha, etc)
- Fresh fruits & vegetables (unprocessed)
- Edible roots and tubers: Like potatoes, ginger, turmeric, unsliced/unprocessed forms
- Unprocessed fish and meat: (Not packaged or processed)
- Tender coconut, jaggery, papad, flour, curd, lassi, buttermilk, milk, aquatic feeds and supplements
- Unprocessed tea leaves and coffee beans
- Seeds for planting
Raw materials & traditional fabric
- Raw silk, silk waste
- Unprocessed wool
- Khadi fabric, cotton for khadi yarn, raw jute fiber
- Firewood, charcoal
- Handloom fabrics
Tools, instruments & accessibility aids
- Basic hand tools, such as spades and shovels
- Agricultural tools
- Hearing aids and other assistive devices for individuals with disabilities
Miscellaneous essentials
- Books, newspapers, journals, geographical maps, printed materials
- Non-judicial stamp paper, postal items
- Live animals (excluding horses), beehives, human blood, semen
- Plain bangles, chalk sticks
- Contraceptives, religious items (e.g., idols, bindis, kumkum), earthenware and pottery
- Kites, organic manure
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