Overview

• India’s 56th GST Council approved two main slabs of 5% and 18% with a 40% demerit band for select luxury and sin goods, with new rates effective September 22 except for certain tobacco items tied to the compensation cess.
• The government pegs the net fiscal impact at about ₹48,000 crore after factoring foregone revenue and expected gains from the 40% category.
• The consumer affairs ministry and tax authorities will monitor prices and treat failure to pass on rate cuts as an unfair trade practice, with potential penalties of up to ₹10 lakh for a first violation and ₹50 lakh for repeat offences.
• Process changes include eliminating the value threshold for GST refunds on low-value e-commerce consignments and operationalising the GST appellate tribunal to accept appeals by end-September, with hearings expected by December 2025.
• Industry leaders and analysts say lower rates should lift consumption and ease inflation pressures, highlighting benefits for autos, consumer durables, cement, textiles, insurance and agriculture.