56th GST Council: two main rates, 5% and 18%, and a 40% de-merit rate
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Asked by UPSCPrelims 2018, 20172 PYQs
UPSC has already asked about this. Read the story with these questions in mind.
What happened
- The 56th GST Council approved moving from four slabs to a standard rate of 18% and a merit rate of 5%, with a special 40% rate for a few goods [PIB].
- Individual life and health insurance policies are exempt; UHT milk, paneer and Indian breads go to nil [PIB].
- ACs, TVs, small cars and motorcycles up to 350 cc move from 28% to 18%; cement from 28% to 18%; tractors and farm machinery from 12% to 5% [PIB].
Background
- The reforms were announced by the PM in his Independence Day speech on 15 August 2025 [PIB].
Why it matters
- Fewer slabs cut classification disputes; lower rates on mass items aim to lift consumption.
How to use this in Mains
- As per PIB (2025-09-03): the 56th GST Council approved moving from four slabs to a standard rate of 18% and a merit rate of 5%, with a special 40% rate for a few goods.
- Fewer slabs cut classification disputes; lower rates on mass items aim to lift consumption.
Quotable data pointACs, TVs, small cars and motorcycles up to 350 cc move from 28% to 18%; cement from 28% to 18%; tractors and farm machinery from 12% to 5%.
PIB: 56th GST Council recommendations, 3 Sep 2025
Exam angle
UPSC
Prelims: new GST slabs. · Mains: GST reform, cooperative federalism.
Practice MCQs
Original practice questions (not PYQs).
Practice · UPSC
New GST standard and merit rates
Answer (b) & explanation
PIB.
Practice · UPSC
Special de-merit rate
Answer (c) & explanation
PIB.
Practice · UPSC
GST on individual health insurance policies after the change
Answer (d) & explanation
PIB.
Go deeper
Official source: PIB: 56th GST Council recommendations, 3 Sep 2025
facts from cited sources only; faculty review pending