September 3, 2025

Hold on to your wallets, India! The 6th GST Council meeting, led by Union Finance Minister Nirmala Sitharaman, is cooking up a powerful tax reform recipe. The plan? Chop the messy 4-tier GST slabs of 5%, 12%, 18%, and 28% down to just two – a simple 5% and a smart 18%. Imagine most daily stuffs like butter, pencils, and even some electronics getting cheaper with lower GST rates! But wait, there’s a hot twist! A brand-new 40% tax slab is in the mix for luxury goods and sin items like tobacco, pan masala, and cigarettes. Entry-level cars might get a friendly 18% tax, while the swanky SUVs could face the spicy 40% charge. What about electric vehicles? The Centre wants to give EV buyers a sweet 5% GST, pushing India’s green dream forward, even though the Group of Ministers initially leaned toward 18% for EVs priced under Rs 40 lakh. Amid these masaledar moves, opposition-ruled states like West Bengal, Kerala, and Tamil Nadu sound a cautionary note. They worry that these tax cuts could shrink their revenue pot and demand extra compensation. The conversation around the compensation cess – a special tax designed to fill revenue gaps – is sizzling too. Although it was due to end in June 2022, it’s been extended till March 2026 to repay loans taken during the pandemic. The Finance Ministry hopes that cutting GST rates and lowering prices will boost consumption enough to balance the books. SBI research backs this upbeat view, projecting states could actually see GST revenues jump by over ₹4 lakh crore this year. Meanwhile, the textile industry tops the list of sectors anxiously watching the Council’s moves, as they seek government support to battle rising US tariffs. At market open on the meeting day, Sensex and Nifty hovered flat, waiting for GST decisions. Meanwhile, gold glittered with new highs, adding more drama to the financial scene. So, brace yourself! If the GST Council gives a thumbs up to these reforms, your purchases might just get cheaper, EVs more affordable, and luxury goods pricier – all under the watchful eyes of Finance Minister Nirmala Sitharaman and state ministers wrestling to balance benefit and budget. This GST makeover promises to be the Diwali gift that lights up India's economy!

Read More at Thehindubusinessline →

Tags: Gst council meeting, Gst reform 2025, Tax slabs, Compensation cess, Electric vehicles gst, Nirmala sitharaman,