The Government of India has undertaken a major rationalisation of Goods and Services Tax (GST) rates with the aim of reducing tax burden on citizens and creating a more business-friendly tax system. This information was given by the Minister of State in the Ministry of Finance, Shri Pankaj Chaudhary, in a written reply in the Lok Sabha on December 08, 2025.
Highlighting the reforms, the Minister informed that GST rates on many goods and services have been reduced across multiple slabs, following the recommendations of the 56th GST Council Meeting held on 03rd September 2025. The rationalisation includes reduction of GST rates from 28% to 18%, 18% to 12%/5%, and 12% to 5%/Nil, covering a wide range of sectors.
Background and Objective
The Minister further stated that a series of expert consultations and reviews preceded the rate reductions.
In line with the decisions of the 45th GST Council Meeting held on 17th September 2021, a Group of Ministers (GoM) on Rate Rationalisation was constituted to:
- simplify GST rate structure
- correct inverted duty structures
- reduce classification disputes
- enhance revenue stability
Additionally, following the recommendations of the 54th GST Council Meeting on 09th September 2024, a GoM on Life and Health Insurance was formed on 15th September 2024 to evaluate the existing GST regime on insurance and submit proposals for reform.
Outcome and Future Impact
The reports of both GoMs were presented before the GST Council in its 56th meeting held on 03rd September 2025, leading to the adoption of the present GST rate reduction framework.
The Minister stressed that these reforms are multi-sectoral and multi-thematic, focusing on:
- improving the quality of life of all citizens
- supporting small traders and businesses
- ensuring ease of doing business across sectors
He also affirmed that the Government has assessed the implications of these reductions, which are expected to increase market efficiency and compliance while reducing tax-related litigation.
Conclusion
The GST rate rationalisation demonstrates the Government’s continued commitment toward creating a simpler, transparent, citizen-centric and business-supportive tax regime. The Finance Ministry stated that GST reforms will continue to align with national economic priorities and stakeholder feedback.
The reply can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2025/12/IMPACT-OF-GST-REDUCTION.pdf
