The council simplified the tax structure by consolidating rates into two slabs—5% and 18%—while imposing a special 40% rate on "sin" goods.
Published Sep 04, 2025 | 4:05 PM ⚊ Updated Sep 04, 2025 | 4:05 PM
Congress MP and Leader of Opposition Rahul Gandhi. Credit: x.com/INCIndia
Synopsis: The new rates, finalised at the 56th GST Council meeting chaired by the Union Finance Minister Nirmala Sitharaman, aim to streamline the tax system and stimulate economic activity. Announced by Prime Minister Narendra Modi during his Independence Day speech on August 15, 2025, these changes promise a shift in the complex GST regime.
The GST Council on Wednesday, 3 September, introduced a crucial overhaul of India’s Goods and Services Tax (GST) system to be effective from September 22, 2025.
The Finance Ministry said that the intent behind the reform is easing the financial burden on households, businesses, and the healthcare sector.
The council simplified the tax structure by consolidating rates into two slabs—5 percent and 18 percent—while imposing a special 40 percent rate on “sin” goods like high-end cars and tobacco.
This merges the previous 12 percent and 28 percent slabs, with the 18 percent rate now applying uniformly to most goods and services, including small cars, motorcycles (up to 350cc), electronics, household items, professional services, and all auto parts.
However, the Congress party has come down heavily on the timing and intent of these reforms.
Senior party leader Pawan Khera, in a post on X, remarked, “When they finally have to follow Rahul Gandhi’s advice, why do they take so much time in doing that?”
When they finally have to follow @RahulGandhi’s advice, why do they take so much time in doing that? pic.twitter.com/Lj4vISEb1L
— Pawan Khera 🇮🇳 (@Pawankhera) September 4, 2025
Khera was pointing towards 2016/17 posts by Rahul Gandhi, who had advocated for a GST cap at 18 percent, stating, “as an indirect tax affects rich and poor alike, I urge GST council to keep the rate at 18 per cent or lower so that the poor are not unduly burdened.”
As the GST Council begins its deliberations today I want to stress again that an 18% cap on the GST rate is in everybody’s interest
— Rahul Gandhi (@RahulGandhi) October 18, 2016
Gandhi has frequently dubbed the GST the “Gabbar Singh Tax,” pertaining to its perceived burden on the common man.
GST on Health Insurance: 18%
GST on Hospital Room: 5%
GST on Diamonds: 1.5%‘Gabbar Singh Tax’ is a painful reminder of who the PM cares for.
A single, low GST rate will reduce compliance costs, prevent govt from playing favourites & ease burden on poor & middle class families.
— Rahul Gandhi (@RahulGandhi) July 5, 2022
Congress MP Jairam Ramesh echoed this sentiment, noting, “The Indian National Congress has for long been advocating for a GST 2.0 that reduces the number of rates, cuts the rates on a large number of items of mass consumption, minimises evasion, mis-classification, and disputes, does away with inverted duty structure (lower tax on output as compared to inputs), eases the compliance burden on MSMEs, and expands GST coverage.”
The Indian National Congress has for long been advocating for a GST 2.0 that reduces the number of rates, cuts the rates on a large number of items of mass consumption, minimises evasion, mis-classification, and disputes, does away with inverted duty structure (lower tax on…
— Jairam Ramesh (@Jairam_Ramesh) September 4, 2025
The grand old party welcomed the reforms but argued that they were overdue, with Ramesh adding that the prime minister has finally understood that “as long as these changes are not introduced and there is no substantial increase in consumption and spending, the process of development will not accelerate.”
Former finance minister P Chidambaram also weighed in, calling the reforms “8 years too late.”
In a post on X, he stated that the current GST design and rates should not have been introduced in the first place, adding that the Opposition had repeatedly warned against these issues for years, but their pleas were ignored.
The GST rationalisation and the reduction in rates on a range of goods and services are WELCOME but 8 years TOO LATE
The current design of GST and the rates prevailing until today ought not to have been introduced in the first place
We have been crying hoarse for the last 8…
— P. Chidambaram (@PChidambaram_IN) September 3, 2025
The new rates, finalised at the 56th GST Council meeting chaired by the Union Finance Minister Nirmala Sitharaman, aim to streamline the tax system and stimulate economic activity.
Announced by Prime Minister Narendra Modi during his Independence Day speech on August 15, 2025, these changes promise a shift in the complex GST regime.
