GST Council clears 2-slab system: Full list of items under 5% and nil rates

Under the two-slab system, the GST Council has scrapping 12 per cent and 28 per cent rates. Now, essential items like food, medicines, and books fall under zero and 5 per cent rates

The Goods and Services Tax (GST) Council on Wednesday approved the new two-slab tax structure. It scrapped the 12 per cent and 28 per cent slabs, reduced tax on several essential goods, and placed higher levies on select ‘sin’ items.  Finance Minister Nirmala Sitharaman called the decision not just rate rationalisation but a “structural reform” that would make GST simpler for both businesses and consumers.

 

“All decisions were taken unanimously, with no disagreement from any state,” Sitharaman said after the meeting. The new rates will come into effect on September 22, the first day of Navratri. 

Explaining the move, Sitharaman said the reform was not only about lowering rates. “It’s also on structural reforms and for ease of living. We have corrected inverted duty structure problems. We have resolved classification-related issues and we have ensured that there is stability and predictability about the GST,” she said. 

 

However, opposition-ruled states expressed concern over the expected revenue loss of nearly ₹48,000 crore, pointing to the absence of a clear compensation mechanism.   

What gets cheaper

Several daily-use items and essential medicines will now attract zero GST: 

• Food items: UHT milk (pasteurized at ultra-high temperature), paneer (pre-packaged), pizza bread, khakhra, chapathi, roti, paratha, parotta, and other Indian breads (reduced from 5-18 per cent to nil).

• Medicines: Life-saving drugs like Agalsidase Beta, Imiglucerase, Eptacog alfa, Onasemnogene abeparvovec, Daratumumab, Atezolizumab, Inclisiran, and many others will now be tax-free.

• Education supplies: Erasers, pencils, crayons, chalks, sharpeners, exercise books, graph/ lab notebooks, maps, globes, and uncoated paper (all moved from 5-12 per cent to nil).   

What now attracts 5 per cent GST

A wide range of goods and services have been shifted to the 5 per cent GST slab from higher rates, making them cheaper: 

• Food and beverages: Condensed milk, butter, ghee, cheese, dry fruits (almonds, pistachios, cashews), dried fruits (dates, figs, mangoes, citrus fruits), pasta, noodles, biscuits, cakes, chocolates, jams, juices, ice cream, namkeens, packaged water (20-litre bottles), and plant-based drinks.

• Household and personal items: Talcum powder, shampoo, toothpaste, shaving cream, soaps, candles, matches, toothbrushes, stationery, rubber bands, and handmade paper.

• Medicines and healthcare: Anaesthetics, medical oxygen, diagnostic kits, multiple traditional and modern medicines, surgical rubber gloves, spectacles, thermometers, X-ray machines, and glucometers.

• Agriculture and industry: Pumps, harvesters, sprinklers, composting machines, biodiesel, plastic feeding bottles, tractor tyres, solar panels, windmills, tidal energy devices, and hydraulic pumps.

• Handicrafts and textiles: Leather goods, handbags, jewellery boxes, toys, dolls, statues, carpets, towels, embroidery, bamboo/cane furniture, hurricane lamps, and handcrafted items.

• Transport and mobility: Bicycles, motorcycles below 350cc, rickshaws, trailers, tractors, fuel cell motor vehicles, and walkie-talkies for defence and police.

• Other categories: Marble and granite blocks, bio-pesticides, particle boards, fibre boards from agri-waste, renewable energy devices, electric accumulators (non-lithium), and fishing equipment.