Latest GST Update 2025: The Goods and Services Tax is not just a system for the Indian economy but is also an important pillar of the integrated financial structure. This GST system has made India’s economy and tax system even more simple and transparent. GST was implemented in the whole of India from July 2017, and since then, from time to time, the government has been making various types of improvements and changes in it so that the interests of the people can be balanced through GST and the consumer class gets direct benefit. And in this sequence, the 56th council meeting is going to be organized by the GST Council on September 2025.
Under this council meeting, the GST Council is going to take an important decision. Yes, this decision will be taken on the same issue that was announced by Prime Minister Narendra Modi on Independence Day. We are talking about the Diwali bonus of GST, after which the countrymen are going to get a double gift.
What is this ‘Diwali Bonus’ of GST Counsel?
As we all know, on the occasion of India’s Independence Day, recently Prime Minister Narendra Modi announced in his speech from the Red Fort that soon a new change will be made by the GST Council. Under this new change, the GST slab will be simplified. Due to this simplification, the 12% and 28% slabs will be removed, due to which the countrymen will get a double gift. As soon as this new slab is implemented, many things will become cheaper, and the GST Council is going to hold a meeting on September regarding this decision.
What are the proposals, and what will be the outcome?
Let us tell you that under this meeting, three big and far-reaching issues are expected to be discussed. The first is Compensation Cess, the proposal to abolish which is going to be issued soon. Let us tell you that this CESS was implemented to compensate for the income loss of the states during the Corona period, which is now completely unnecessary. In such a situation, there is a possibility of cancellation of Compensation Cess.
At the same time, there is a possibility of repayment of Rs 2.59 lakh crore given to the states by October 2025. In such a situation, the whole concept of compensation cess is now going to prove meaningless, due to which the government will remove CESS. The second change is going to be made under GST slabs. Meaning, now the entire slab will be included in only two slabs, which will be 5% and 18%. The 12% and 28% slabs will be completely removed, due to which the price of many items will come down. At the same time, the idea of giving a GST exemption on life and health insurance premiums is also being considered, which will provide direct relief to millions of middle-class and senior citizens.
GST Council to Revise GST Rates 2025
Compensation cess will get removed: As we said, the Goods and Services Tax was started on 1 July 2017, and under this tax, compensation for up to 5 years was guaranteed to the states under revenue loss. Meaning, this phrase was amended through Compensation Cess, which was limited to March 2022. But due to the fall in revenue during the Covid-19 pandemic, it was extended further.
Now the Central Government and the Finance Ministry estimate that the loan, which was passed to help the states, has been repaid by the states from time to time, and now the repayment of this loan will be completed by October 2025. In such a situation, the need for additional CESS will now end, due to which Compensation CESS will be removed.
New GST slab: Apart from this, another important decision will be considered by the GST Council on September. Under this decision, the GST Council is going to consider only slabs like 5% and 18% as valid. That is, the structure of GST rates is going to be simplified. Currently, the GST slab includes a total of four slabs: 5%, 12%, 18%, and 28%, but in the coming time, the GST Council will abolish the slabs of 12% and 28%. As soon as the 12% and 28% slabs are abolished, all the items included in the 12% slab will be included in the 5% slab.
At the same time, all the items included in the 28% slab will be included in the 18% slab. Due to which the price of many items is likely to decrease. And this will have a direct impact on the items of daily use. Along with this, MSME will also get a lot of relief from this decision, which will directly benefit consumers and small businessmen.
Insurance premium GST nil: Another proposal will be passed in this council meeting in which 18% GST on personal health and life insurance premiums will be removed and made zero. Meaning it will be completely exempted. This idea has also been supported by GMO, and the states have also supported it. Although some companies are fearing privatization of profit, the decision will be very beneficial for the customers taking life insurance and personal health insurance.
According to sources, some states are also worried about the revenue loss due to this, but in the long run this decision will be very beneficial because it will give relief to the insurance holders, due to which more and more insurance will be taken, and in the long term it will also provide a better level to the insurance business in India.
Effects of New GST Slabs 2025
- If the compensation cess is removed under the meeting of the GST Council to be held on September, then expensive items like vehicles, tobacco products, AC, washing machines, etc. will become cheaper.
- On the other hand, initially the states will feel the lack of revenue when the cess received by the states ends, but the long-term effects will definitely be seen.
- Apart from this, the GST Council is going to reduce the lab of the tax structure, due to which the tax system will become easier.
- Now people will not have to get confused due to the tax slab; things will also be cheaper due to the slab of only 5% and 18%.
- Also, under this decision, GST will be removed on health and life insurance, due to which more and more people will take advantage of insurance services.
- If the price of many goods is reduced, then consumption will increase in the market, investment will increase due to increased consumption, and the economy will get a boost due to increased investment.
GST Rate Cut 2025: GST Council’s Diwali Special Decision in September
Let us tell you that the 56th meeting of the GST Council is going to be held on September, 2025. Under this meeting, a decision can be taken to do the compensation cess from 31 October 2025. The decision to simplify the GST slab will be passed by Diwali 2025. Also, the health and life insurance GST exemption is expected to be implemented from the new financial year, i.e., April 2026.
Conclusion About Latest GST Update 2025
Overall, in the coming time, the GST Council is going to give double benefit to the consumers and businessmen across the country. However, what decisions will be taken under the meeting to be held on September will be known only after the meeting, but it is clear that in view of the guarantee of the Diwali bonus that Prime Minister Narendra Modi has given in the Independence Day speech, the GST Council will definitely take a big decision in the interest of the countrymen. It is only after this council meeting that the actual decision, time limit, and methods of implementation will come, which will affect the financial direction of the country.