New GST Boost: Health, family insurance exempted; cars, TV & many more items get cheaper

In a significant relief for the common man, the 56th GST Council meeting on Wednesday announced sweeping tax reductions across a wide range of items, simplifying the tax structure and reducing costs on household essentials, food products, and several consumer durables.

Addressing the media, Union Finance Minister Nirmala Sitharaman said, “In common man and middle-class items, there is a complete reduction.”

Under the new rates, several essential items including hair oil, toilet soap, soap bars, shampoos, toothbrushes, toothpaste, bicycles, tableware, kitchenware, and other household articles will now attract a 5% GST.

#WATCH | Delhi: After the 56th GST Council meeting, Union Finance Minister Nirmala Sitharaman says, "GST reduced from 28% to 18% on small cars and motorcycles which are equal to or below 350 cc."

Reduction of GST from 28 to 18% on buses, trucks, and ambulances. Uniform rate of… pic.twitter.com/FLpOz31Aeu

— ANI (@ANI) September 3, 2025

The council has also slashed GST to zero on several basic products. Ultra-high temperature milk, chena, paneer, and all types of Indian breads, including rotis and parathas, will now have a nil tax rate, making them completely tax-free.

Additionally, food items such as namkeen, bhujia, sauces, pasta, instant noodles, chocolates, coffee, preserved meat, cornflakes, butter, and ghee have seen a reduction from 12% or 18% to just 5%.

After the 56th GST Council meeting, Union Finance Minister Nirmala Sitharaman says, "Insurance services from 18% currently will go into two, three different categories. Exemption of GST on all individual life insurance policies, whether term life, ULIP, or endowment policies, and reinsurance thereof, to make insurance affordable for the common man and increase the insurance coverage in the country. Exemption of GST on all individual health insurance policies, including family floater policies and policies for senior citizens, and reinsurance thereof to make insurance affordable for the common man and increase the insurance coverage in the country."

Furthermore:

1. GST has been reduced from 28% to 18% on small cars and motorcycles which are equal to or below 350 cc.
2. Reduction of GST from 28 to 18% on buses, trucks, and ambulances.
3. Uniform rate of 18 % on all auto parts. Three wheelers from 28 to 18%.
4. Man-made textile sector by reducing the GST rate on man-made fibre from 18% to 5% and man-made yarn from 12 to 5%.
5. Fertiliser sector also saw reduction of GST from 18% to 5% on sulfuric acid, nitric acid and ammonia.
6. There has been reduction of GST from 12 to 5% on renewable energy devices and parts for their manufacture such as biogas plants, windmills, wind-operated electricity generators, waste to energy plants, devices, PV cells, whether or not assembled in modules or made up in panel, solar cookers, solar water heaters and systems and so on.

These changes are part of the GST rate rationalisation aimed at boosting consumption and simplifying compliance across sectors.

Meanwhile, Nirmala Sitharaman said, "There is a special rate which is 40%. Almost all goods are between 18% and 5%. There is one special rate which is only for sin and super luxury goods. That special rate of 40% has also been proposed, and it's been cleared and will apply only to paan masala, cigarettes, gutka, and other tobacco products such as chewing tobacco, products like zarda, unmanufactured tobacco, and Bidi."

"All goods, including aerated waters containing added sugar or other sweetening matter or flavoured, caffeinated beverages, carbonated beverages of fruit drink or carbonated beverages with fruit juice and other non-alcoholic beverages, excluding those specified at lower rates, will all be covered under 40%."