New GST rates have been announced by by Prime Minister Shri Narendra Modi in what the Indian Government terms as a bid to represent a strategic, principled, and citizen-centric evolution of a landmark tax framework, which will enhance the quality of life of every last citizen. The GST Council has approved the new GST rates at the 56th meeting of the GST Council, which was held in New Delhi presided by Nirmala Sitharaman,, Union Finance & Corporate Affairs Minister. The reforms are aimed at a multi-sectoral and multi-thematic focus on improving the lives of all citizens and ensuring ease of doing business for all, including small traders and businessmen, says the Indian Government.
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“During my Independence Day Speech, I had spoken about our intention to bring the Next-Generation reforms in GST. The Union Government had prepared a detailed proposal for broad-based GST rate rationalisation and process reforms, aimed at ease of living for the common man and strengthening the economy. Glad to state that GST Council, comprising the Union and the States, has collectively agreed to the proposals submitted by the Union Government on GST rate cuts & reforms, which will benefit the common man, farmers, MSMEs, middle-class, women and youth. The wide ranging reforms will improve lives of our citizens and ensure ease of doing business for all, especially small traders and businesses,” said Narendra Modi on the new GST rates.
New GST Rates for Key Commodities
The GST Council announced key recommendations on tax rate revisions aimed at providing relief to individuals, the aspirational middle class, and the common man, while also introducing measures to further ease trade under the GST framework. Some of the main highlights are as follows:
| Changes in GST | ||
| Name of commodity | GST Before | GST After |
| All Drugs and medicines | 12% | 5% |
| Silicon wafers | 12% | 5% |
| Renewable energy devices and parts for their manufacture | 12% | 5% |
| Spark-ignition reciprocating or rotary internal combustion piston engine | 28% | 18% |
| Compression-ignition internal combustion piston engines | 28% | 18% |
| Air-conditioning machines | 28% | 18% |
| Television sets | 28% | 18% |
| Motor vehicles for the transport of ten or more persons | 28% | 18% |
| Petrol, Liquefied petroleum gases (LPG) or compressed natural gas (CNG) driven motor vehicles as well as diesel vehicles of engine capacity not exceeding 1200cc and of length not exceeding 4000 mm. | ||
| Instruments and appliances used in medical, surgical, dental or veterinary sciences, including scintigraphic apparatus, other electro-medical apparatus and sight-testing instruments | 12% | 5% |
| Instruments and apparatus for medical, surgical, dental or veterinary uses for physical or chemical analysis. | 18% | 5% |
| Photographic plates | 12% | 5% |
Industry Reacts to GST Reforms
On the electric mobility front, Vasudha Madhavan, Founder and CEO of Ostara Advisors, highlighted the significance of the government’s decision to keep all EVs, whether mass market or luxury SUVs, under the 5% GST slab without any additional cess. “The government’s decision to keep all EVs, whether mass market or luxury SUVs, under the 5% GST slab without any additional cess is a progressive step that will have a significant impact on adoption. By removing the tax disparity between smaller EVs and larger SUV models, the policy creates a level playing field, improves affordability, and encourages greater consumer choice. On the other hand, the move is expected to keep upfront costs low for customers while accelerating market growth. This will not only boost sales across segments but also reinforce confidence among manufacturers and investors in India’s long-term commitment to sustainable mobility. Importantly, it will also encourage our automotive component manufacturers to build a full-fledged EV component ecosystem in India. Ultimately, it signals India’s intent to make EVs mainstream rather than niche,” she said.
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The consumer durables sector is also set to benefit from the Council’s move to rationalise GST on air-conditioners and televisions from 28% to 18%. Manish Sharma, Chairman, Panasonic Life Solutions India, called it a much-needed reform for households and the industry. “The rationalisation of GST on air-conditioners and televisions from 28% to 18% is a welcome reform that will directly benefit consumers, especially as we step into the festive season. With this reduction, products that were earlier seen as aspirational are now more accessible, allowing a larger section of households to upgrade to energy-efficient and connected appliances. This move, coupled with the recent revision in the income tax slab exempting annual earners up to Rs 12 lakhs, is expected to significantly boost disposable incomes and consumer sentiment. Together, these reforms create a strong momentum for the consumer durables sector, driving higher demand across urban and emerging markets. At Panasonic, we believe this will accelerate penetration of modern appliances, improve quality of life for consumers, and in turn, contribute to India’s broader economic growth momentum,” he noted.
The reforms are equally significant for the corporate commute ecosystem. Sriram Kannan, Founder and CEO of Routematic, underlined how GST 2.0 will expand opportunities for driver-partners and corporates alike. “The GST 2.0 reforms will significantly transform the corporate commute ecosystem in which Routematic operates. By reducing GST on commercial vehicles from 28% to 18%, more driver-partners will find it viable to purchase ICE vehicles at lower EMIs boosting their earnings and livelihood security. For Routematic, this directly translates into a larger and more reliable supply pool of vehicles, enabling us to offer corporates more affordable and scalable commute programs. At the same time, retaining the 5% GST rate on electric vehicles ensures that EV leasing remains attractive for India’s sustainability goals. However, for EV adoption to truly accelerate, these tax incentives must be complemented by rapid expansion of charging infrastructure,” he explained.
Rahul Garg, Founder and CEO, Moglix, adds that the GST reforms would enhance the ease of doing business in India: “The GST Council’s move to introduce a simplified two-slab structure is a landmark reform that will significantly ease doing business in India. By lowering compliance burdens and rationalizing input costs, it will strengthen the backbone sectors of our economy namely manufacturing, logistics, fintech, and B2B commerce. These reforms will not only streamline supply chains and improve cash flows for enterprises but also ‘de-traffic’ India’s tax ecosystem, creating a smoother, faster, and more predictable growth journey for businesses across the country.”
Snehdeep Aggarwal, Founder and Chairman, Bhartiya Group, stated: “The reduction of GST on cement, steel and related construction materials is a timely and much-needed boost for the real estate sector. Lower input costs will allow developers to invest more in superior design, modern amenities, and sustainable practices, while ensuring greater affordability for homebuyers. Corporate real estate too will benefit from improved cost efficiencies, making office and commercial projects more attractive for businesses and investors. With more disposable income in the hands of customers, this reform is set to accelerate demand and strengthen transparency across the industry.”
Rana Dutta, Senior Vice President CNG Marketing & Business Development, THINK Gas spoke about the new GST rates saying: “By bringing down the GST rate on commercial vehicles where CNG contributes significant volume from 28% to 18% and CNG cars under 1200 cc from 29% (inclusive of cess) to 18%, the GST Council has created a strong incentive for customers to choose environment-friendly alternative. This reform is expected to significantly boost demand in the automobile sector while accelerating the adoption of natural gas as a preferred fuel, given its affordability and efficiency. This aligns well with India’s ambition to increase the share of natural gas in the energy mix from the current 6% to 15% by 2030, thereby reducing carbon emissions and improving air quality. The natural gas sector is poised to support customers who will be taking the decision to adopt CNG fuelled cars, SCVs, LCVs and Buses with strong and expanding infrastructure across India. This move will also encourage investments and support India’s energy transition goals. We see this as a measure that will promote sustainable mobility and ensure economic growth through higher CNG powered vehicle penetration.”
Subroto Bose, Partner, ASA and Associates, said: “The recommendations on tax rate changes by the GST Council will have a huge positive impact on consumption and boost production. The 3-rate slab structure brings much needed clarity especially to foreign investors interested in the India growth story. Simplified GST registrations for small and low risk businesses and sanction of risk-based provisional refunds will reduce administrative bottlenecks and facilitate trade.
