Government Announces “Next-Gen GST Reform” as a Historic Diwali Gift
New Delhi | 4 September 2025:In a landmark move ahead of Diwali, the Government of India has unveiled the “Next-Gen GST Reform”, promising significant relief for households, farmers, and businesses alike. The reforms, aimed at reducing the cost of living and boosting ease of doing business, bring sweeping cuts in GST rates across essential goods, agriculture, healthcare, education, automobiles, and electronic appliances.
According to the Finance Ministry, daily essentials such as hair oil, shampoo, toothpaste, toilet soap, butter, ghee, cheese, utensils, pre-packaged snacks, feeding bottles, and sewing machines will now attract only 5% GST, down from 12–18% earlier.
Farmers too stand to benefit, with GST on tractor tyres, parts, and agricultural machinery slashed from 18% to 5%, and on bio-pesticides and micro-nutrients from 12% to 5%. Drip irrigation systems and sprinklers have also been brought under the lower 5% slab.
Healthcare items such as individual health and life insurance, thermometers, medical grade oxygen, diagnostic kits, glucometer strips, and corrective spectacles will either see GST reduced to 5% or removed entirely. Education essentials such as maps, charts, globes, exercise books, pencils, sharpeners, and erasers have been made tax-free.
Automobile and appliance costs are also set to drop, with GST on hybrid cars, diesel cars, three-wheelers, motorcycles (350 cc & below), air conditioners, televisions, monitors, projectors, and dishwashing machines cut from 28% to 18%.
The reforms also feature process improvements:
Automatic registration within three working days,
Provisional refunds through data-driven evaluation,
Zero-rated supplies and support for MSMEs under inverted duty structures.
Prime Minister Narendra Modi called the new GST structure a “gift for every Indian this Diwali,” saying it would reduce taxes for the common public and bring huge benefits to small businesses. “Everyday items will become cheaper, giving a boost to the economy,” he said.
The government expects the phased rollout of the Next-Gen GST to simplify compliance, strengthen revenue transparency, and accelerate India’s journey toward an “Aatmanirbhar Bharat”.