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 tax structure with a streamlined 'Simple Tax' system, consisting of:
- 18% Standard Rate
- 5% Merit Rate
- 40% De-merit rate applicable only on select items
The rationalisation focuses heavily on relief for the common man, labour-intensive industries, and critical sectors. Key changes include:
- GST exemption on all individual life and health insurance policies
- Reduction of GST on everyday goods like hair oil, soap bars and bicycles from 18%/12% to 5%
- Reduction of GST to NIL on 33 lifesaving medicines
- NIL GST on three cancer and rare-disease treatment drugs previously taxed at 5%
- Reduction of GST on agricultural goods and farm machinery to 5%
GSTAT Operationalised; Faster Refunds and Easier Registration for Small Businesses
The reforms also include major procedural improvements, such as:
- Functional rollout of the Goods and Services Tax Appellate Tribunal (GSTAT)
- Risk-based provisional refund system allowing 90% of refunds to be processed swiftly
- Launch of an optional simplified registration scheme for small businesses
These changes aim to reduce compliance burden, resolve disputes faster, and enhance ease of doing business.
Govt Monitoring Price Drop Post Reform, Says Benefits Reaching Consumers
The Finance Ministry confirmed that it is monitoring prices of essential goods and medicines to ensure that the benefits of GST rate cuts are passed on to consumers. Initial findings indicate that the benefits have indeed been transferred to end users following the September 2025 rate reductions.
Five-Year GST Collection Trends Show Strong Growth
The Ministry also shared category-wise GST collection data for the last five financial years. Collections have risen steadily:
| Financial Year | CGST (Rs cr) | SGST (Rs cr) | IGST (Rs cr) |
|---|---|---|---|
| 2020-21 | 209,916 | 272,828 | 565,719 |
| 2021-22 | 269,137 | 344,216 | 762,270 |
| 2022-23 | 323,923 | 410,251 | 945,220 |
| 2023-24 | 375,710 | 471,195 | 1,026,790 |
| 2024-25 | 413,776 | 516,448 | 1,125,334 |
| 2025-26 (till Nov) | 293,207 | 362,948 | 819,333 |
The steady rise demonstrates a strengthening tax base and enhanced compliance across sectors.
Impact of New GST Rates Seen from September 2025 Onward
With the new structure effective 22 September 2025, the government provided month-wise comparisons showing an increase in GST collections compared to 2024:
FY 2025-26 vs FY 2024-25 (Same Months)
- September: CGST Rs 33,646 cr vs Rs 31,422 cr
- October: CGST Rs 36,547 cr vs Rs 33,821 cr
- November: CGST Rs 34,843 cr vs Rs 34,141 cr
Similar growth is reflected in SGST and IGST collections, indicating the early positive impact of rate rationalisation on overall GST revenue.
Official copy of the data has been attached
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