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India’s GST Council approved a next-generation reform replacing the four-tier system with a simpler two-rate model: a standard 18% rate and a 5% merit rate, plus a limited 40% demerit rate for select goods.
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The reform reduces GST on essential items, household goods, services like gyms and salons, and life and health insurance, while basic food products remain exempt, easing financial burdens for consumers, farmers, SMEs, and labor-intensive industries.
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Measures also include faster GST dispute resolution via the Appellate Tribunal starting December 2025, and a simplified registration scheme for eligible small businesses from November, balancing taxpayer relief with an estimated INR 480 billion revenue impact.
Source: vatabout.com
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