ARTICLE ON 56th GST COUNCIL MEETINGS

One of the biggest changes was seen in the Goods and Services Tax (GST) system since its creation in 2017 was implemented in the 56th GST council meeting, which was done by our hon’ble Finance Minister Nirmala Sitaraman, and it took place in September 2025.

In this meeting, she introduced a simplified tax structure to the council, with the goals of increasing consumption, simplifying compliance for enterprises, and lowering complexity. The highlight of this meeting was the discussion that was going on for a long period of time. The existing four slabs that were 5%, 12%, 18% and 28% were now mainly focused on 5% and 18%. Additionally, new slabs were added for the sins and luxury goods, which is 40% as it also replaces the previous use of compensation cess for such items.

Key Changes in Structure:

Changes

Description

Slab Rationalization

The slabs of 12% and 18% have been removed, and two slabs were one for essential goods, which are 5% and 18% for standard goods.

40% new slab introduced

This slab applies to the sins and luxury goods.

Zero Tax on Educational Goods

Some items were tax-free in the structural change, that is, stationery, maps, and some educational items.

GST exemption on Insurance

Health insurance and life insurance policies were now exempt from GST

 

NOTE: - These changes were going to come into effect from 22nd September.

Advantages Of the New Structure: -

  1. Simplification of Compliance, which means reducing the tax slabs, will help the consumer to file the GST and reduce the litigation issues, and also decrease the disputes over tax rates.
  2. Lower Prices of consumer goods help the consumer to buy the essential items for their personal use. The goods were like cement, refrigerators, and compact cars. It will lead to an increase in demand for goods and supply.
  3. Boost in the major sectors like real estate, automobile, and FMCG due to the reduction of prices and leading to an increase in sales.
  4. Encouragement of buying policies, as health insurance and life insurance were exempt from GST slabs, it will encourage people to buy more insurance.

Disadvantages of This Structure: -

  1. Through this change in the structure, states may face some revenue loss from cement and appliances as they are moving to lower tax rates.
  2. Business will need to update the billing systems, which creates a burden upon the businessperson.
  3. Due to the coming of the new tax slab for luxury goods, which creates inflation in the high-end vehicles and beverages.

Conclusion:

The 56th GST council meeting marked a bold step towards simplifying the tax system from the complex one. While these changes lead to an increase in the sales of goods and services Tax as they also pose challenges for states in generating revenue.