Effective implementation of the tax reform will ensure equity and address the States’ revenue loss

By Seela Subba Rao

The 56th meeting of the GST Council, held on 3 September 2025, will be remembered as a landmark in India’s tax history. By shifting to a two-rate structure, the Council has taken a bold step towards a simpler, fairer, and growth-oriented system.

The new structure — 5 per cent and an 18 per cent rate, along with a 40 per cent de-merit rate for select goods — is transformational. Effective from 22 September 2025, it covers 546 goods, of which over 80 per cent have seen rate reductions.

This rate rationalisation will reduce compliance burdens, enhance predictability for business, and make the tax regime more citizen-friendly, aligning it with global best practices. Sim

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