Quick Summary
The Finance Ministry has outlined the scale and impact of the major GST reforms approved by the 56th GST Council, calling the shift to a simplified rate structure a "strategic and citizen-centric evolution" of India's tax system. The information was provided by Minister of State for Finance Shri Pankaj Chaudhary in a written reply in the Rajya Sabha. Two-Rate GST Structure Introduced to Benefit Consumers and Key Sectors According to the government, the reform replaces the previous four-tier
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FAQ :
The new GST structure replaces the previous four-tier system with a simplified 'Simple Tax' system comprising an 18% Standard Rate, a 5% Merit Rate, and a 40% de-merit rate applicable only on select items.
Key changes include GST exemption on life and health insurance, reduced GST on everyday goods like hair oil and soap to 5%, NIL GST on lifesaving medicines and cancer treatment drugs, and reduced GST on agricultural goods and farm machinery to 5%.
Yes, GST collections have shown a steady rise, with month-wise comparisons for FY 2025-26 indicating an increase compared to FY 2024-25, reflecting the early positive impact of the rate rationalisation.
The Finance Ministry is monitoring prices to ensure benefits are passed on, and initial findings indicate that consumers are indeed receiving the benefits of the rate reductions.
Procedural improvements include the operationalisation of the Goods and Services Tax Appellate Tribunal (GSTAT), a risk-based provisional refund system for faster processing, and an optional simplified registration scheme for small businesses.
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