GST slab: The central government has recently taken a big decision affecting the country’s economy and the pockets of the common people. Now, readymade clothes and essential food items can become even cheaper. The reason is clear—the government has prepared a plan to make major improvements in the GST structure to reduce the tax burden on businessmen and provide relief to customers. The Union Cabinet has also given the green signal to this proposal.
The picture will change with two tax slabs
The government is now moving towards making GST simple and transparent. For a long time, traders and the industry had been demanding that complex tax rates be abolished. In this episode, in the Group of Ministers meeting on 20 and 21 August 2025, it was decided that the existing GST slabs of 12 and 28 percent would be abolished. Now there will be only two slabs—5 percent and 18 percent. This decision has also been approved by the Cabinet.
Experts believe that if this system is implemented, consumers will get direct relief. The burden on the textile industry and food products will be reduced, and they will be available in the market at cheaper rates.
Textiles and food products will be cheaper
According to sources, the government has especially focused on the items related to the common man. In the next phase, the textile industry and food items can be included in the 5 percent slab. This is believed to reduce the prices of readymade clothes, pulses, flour, packaged food, and other essential items.
Market experts say that after this reform, the purchasing power of consumers will increase. During the festive season, the consumption of clothes and sweets is high, so this step will have a direct impact on people’s pockets.
Tax on services will also be reduced
A proposal has come to reduce tax not only on goods but also on many services. According to reports, the government is considering reducing the rate of 18 percent on some common services to 5 percent. This means that in the coming time, not only will food and clothes will become cheaper, but customers can also get relief on some services.
The next meeting of the GST Council, which is to be held early next month, will have a final discussion on this proposal. It is believed that after this meeting, the general public can get to hear the official announcement of a big change.
Relief on insurance and health policy
Apart from the construction and infrastructure sector, the insurance sector was also demanding tax relief for a long time. The news is that the government is preparing to completely abolish GST on term insurance and health insurance policies. If this happens, then lakhs of policyholders will get direct relief, and the reach of insurance schemes will become easier for the common man.
Impact on the automobile sector
The impact of the change in GST can also be seen on the automobile industry. According to sources, 18 percent GST can be imposed on small vehicles, i.e., cars up to 4 meters in length. At the same time, big cars and SUVs are likely to be taxed up to 40 percent. This means that small cars may be a little cheaper for common people, but the tax burden on luxury vehicles may increase further.
New rates on sweets and packaged goods
At present, different tax slabs are applicable on sweets as well. 5 percent GST is levied on unbranded sweets, while branded and packaged sweets come under the 18 percent bracket. If the new proposal is implemented, it is expected that common consumers will get some relief here as well.
The general public will get direct relief
This move of the government is being called “Next Generation GST Reform”. Its purpose is to make the tax system so simple that neither businessmen face problems nor consumers have to bear the burden of inflation. The middle-class and lower-class population of the country will get direct benefit from the reduction in GST on clothes, food products, and everyday services.
Economists say that consumption will increase due to a reduction in tax rates, and the market will return to its glory. At the same time, the government’s revenue will also not be lost because it will be compensated for by increased sales volume.