New Delhi, Sep 4: India Inc has lauded the GST Council's continued decisions to shift to two rates of 5% and 18% from September 22, simplifying refund and MSME procedures and exempting personal life and health insurance from the indirect tax regime. Industry bodies said this clarity will ease compliance, reduce litigation and provide much-needed predictability to businesses and consumers.
The GST Council yesterday approved the two-tier rate structure of 5% and 18%, which will come into effect from September 22. CII Director General Chandrajit Banerjee said this move on GST reforms is a milestone. By reducing rates on everyday items and critical inputs, the reforms will provide immediate relief to households and strengthen the foundation for growth, he said.
The GST rate rationalization, which will come into effect from September 22, 2025, is a landmark reform that addresses both consumer welfare and revenue efficiency. By reducing rates on daily essentials like toiletries, packaged foods and utensils from 18-12% to 5%, the reform will ease household budgets and stimulate demand, said Hemant Jain, President, PHDCCI.
Since over 70-80% of textile and apparel units in India are MSMEs, the reform will directly benefit a large segment of the industry by reducing liquidity pressures, enhancing competitiveness and increasing the competitiveness of the sector. FHRAI (Federation of Hotels and Restaurants of India) President K. Shyama Raju welcomed the GST Council's decision to simplify the duty on hotel rooms into two slabs of 5 per cent and 12 per cent.
Reducing the tax on rooms ranging from Rs. 7,500 to 5 by 5 per cent will make Indian hotels more affordable and attractive to domestic and international travellers. He said the reform will directly boost tourism demand, increase accommodation and encourage higher spending in the hospitality value chain.