Group of Ministers · GST Council Secretariat / Ministry of Finance (PIB) · 2025-09-03

Reports of the Groups of Ministers on Rate Rationalisation, Compensation Cess and Health and Life Insurance (56th GST Council)

At its 56th meeting on 3 September 2025, the GST Council took up the work of three Groups of Ministers: on rate rationalisation, on restructuring the compensation cess, and on GST on life and health insurance. The Council approved what it called next-generation GST reform. The four-slab structure was replaced by a two-rate system with a special rate for a small set of goods. The cess was folded into GST for most goods, and individual insurance policies were exempted. The changes took effect from 22 September 2025.

Read the official report →All GST reports

Key findings and recommendations

  • The four slabs were cut to two: an 18 per cent standard rate and a 5 per cent merit rate, plus a 40 per cent special rate on a few goods.
  • Compensation cess was merged into GST rates for most goods so that the overall tax incidence stayed roughly the same.
  • Pan masala, gutkha, cigarettes and other tobacco products keep the existing GST and cess until the loans and interest under the compensation cess account are repaid.
  • Individual life and health insurance policies were exempted from GST.
  • The package was paired with process reforms on registration, returns and refunds.

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