Introduction
The most important step is going to be taken regarding tax reform in India. The 56th meeting of the GST Council is being held in Delhi on 3rd and 4th September 2025. Prime Minister Narendra Modi announced GST reforms from the Red Fort on August 15 and said that the countrymen will get a big gift before Diwali.
In this meeting, the reduction of four GST tax slabs (5%, 12%, 18%, 28%) to two slabs (5% and 18%) can be approved. If this happens then milk, cheese, chips, ice cream to TV-AC and car-bikes can be cheaper.
What is GST Council?
- The GST Council is the highest decision-making body related to the Goods and Services Tax in the country.
- It was formed under Article 279A of the Constitution.
- Chairperson: Currently Union Finance Minister Nirmala Sitharaman.
- Members: Union Government Ministers and Finance Ministers of all States/Union Territories.
- Total Members: 33 (31 States/UTs + 2 Central Government Representatives).
The purpose of the council is to decide the GST tax structure, change tax rates, coordinate between the states and the center.
How are decisions taken in the GST Council?
- Most decisions are taken by mutual consent.
- If a vote is required, a 75 % majority is needed to pass a proposal.
- Voting Weightage:
- Central Government → 33.33%
- State/UT → 66.67% (about 2.15% of each State)
That means the Centre cannot pass any proposal alone, it needs the support of at least 20-21 states.
Existing GST Tax Slabs (2025)
1.5% → Everyday necessities (milk powder, bread, clothes)
2. 12% → Packaged Food, Mobile Phones
3. 18% → Electronics, Services
4. 28% → Luxury Items, Cars
Proposed New GST Framework (GST 2.0)
- 5% → Essential goods and services
- 18% → Most other items
- 40% (Special) → Luxury Cars and “Sin Goods”
The 12% and 28% slabs will be removed.
What could be cheaper?
Everyday Accessories
- Milk, cheese, ghee, butter
- Salted, chips, noodles, pasta
- Packaged juices, jams, ketchup
Electronics & Home Appliances
- TV, AC, Washing Machine
- Mobile Phones, Refrigerators
conveyance
- Small cars and two-wheelers (up to 7–8% cheaper)
- Relief of up to 3–5% on large cars
- 40% tax on SUVs and luxury cars (but cess may be lower)
How much will it affect cars and bikes?
| Vehicle Category | Existing Taxes (GST+Cess) | Proposed Taxes | Possible repercussions |
| Small Petrol Car (1200cc, less than 4m) | 29% | 18% | ~8% Affordable |
| Small diesel cars (1500cc, less than 4m) | 31% | 18% | ~10% Affordable |
| Mid-size car | 43% | 40% | ~3% Affordable |
| Luxury Car | 48% | 40% | ~5% Affordable |
| SUV (1500cc+, 4m+) | 50% | 40% | ~8-10% Affordable |
| Electric car | 5% | 5% | No change |
Cars like Alto K10, Kwid, Creta and Thar can be cheaper by lakhs of rupees.
Discounts on education and essential goods
- Pencil, Practice Book, Graph Book, Lab Notebook → Zero GST Proposed to be introduced.
- Atlas, globes, educational charts → possibility of being tax free.
- Handloom products and shoes under ₹1,000 can also be cheaper.
Objective of Government
- Making the tax system easy and transparent.
- Direct relief to consumers.
- Helping small industries.
- Accelerating the economy by increasing consumption and demand.
Conclusion
The GST Council Meeting 2025 can prove to be the biggest reform in India’s tax system so far. With the implementation of 2 slabs instead of 4, everyday things to cars and bikes will become cheaper. According to PM Modi’s announcement, this change can prove to be a true Diwali gift for the general public.
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