- 09 Sep 2025 06:32 PM
- New
Major GST Reductions to Boost Cooperatives, Farmers & Rural Enterprises
The central government has announced significant GST rate reductions across sectors that directly impact cooperatives, farmers, and rural enterprises. These reforms include GST exemptions on milk and paneer and a reduction to 5% on butter and ghee, directly benefiting over 10 crore dairy farmers. The tax on various cooperative-processed foods like cheese, pasta, jams, and juices has also been reduced to 5%, which is intended to lower household expenses and stimulate demand. Additionally, GST on packing materials like paper, cases, and crates is now 5%, which eases logistics costs. In agriculture, tractors under 1800 cc and their components have seen GST reduced to 5%, as have key fertilizer inputs and twelve bio-pesticides. This aims to make farm equipment and inputs more affordable, promoting mechanization and sustainable farming practices. Commercial trucks and delivery vans now have an 18% GST rate, which is expected to reduce logistics costs and improve export competitiveness.
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- 09 Sep 2025 06:39 PM
- New
GST Reform: Lowered Rates for Textiles & Garments
Source: https://taxguru.in/goods-and-service-tax/gst-reform-lowered-rates-textiles-garments.html
The Ministry of Textiles has announced that the GST Council’s 56th meeting, held on September 3, 2025, approved a series of GST rate reductions for the textiles sector. These changes are intended to remove structural issues, lower production costs, and improve India’s global market position. The reforms include a reduction of GST on readymade garments and made-ups from 12% to 5% for items up to ₹2,500, a move expected to increase consumer demand, particularly in smaller towns and rural areas. Additionally, GST on man-made fibers and yarns has been lowered from 18% and 12% respectively to a uniform 5%, which corrects the inverted duty structure and eases the financial burden on manufacturers. Handloom, handicraft items, and carpets have also seen their GST reduced from 12% to 5% to support artisans and traditional crafts. These reforms are part of the government’s plan to boost the domestic market and help the textile and apparel sector reach a USD 350 billion target by 2030.
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- 09 Sep 2025 06:51 PM
- New
GST Rate Revisions for India’s Auto Sector
Source: https://taxguru.in/goods-and-service-tax/gst-rate-revisions-for-indias-auto-sector.html
The government of India has revised GST rates for several categories within the Ministry of Heavy Industries, including automobiles, tractors, and commercial vehicles. GST on two-wheelers (up to 350cc) and small cars is reduced from 28% to 18%, aiming to make them more accessible to a wider consumer base, including first-time buyers and those in rural areas. Large cars will now have a flat 40% GST with no cess, simplifying the tax structure and potentially making them more affordable for aspirational buyers. Tractors and their parts will see a reduction to 5% from 12%, while buses and trucks will have their GST reduced to 18% from 28%. These changes are intended to stimulate demand across the sector, benefitting automobile manufacturers, ancillary industries, and MSMEs. The tax cuts are expected to create jobs, support financial inclusion, and promote the replacement of older vehicles with newer, more fuel-efficient models. Furthermore, lower GST on commercial vehicles is projected to reduce logistics costs, which can help with inflationary pressures and enhance the competitiveness of exports.
Ministry of Heavy Industries
Government of India has revised GST rates for multiple items pertaining to Ministry of Heavy Industries. It’s detailed clarifications is as follows:
Posted On: 04 SEP 2025 5:31PM by PIB Delhi
Automobiles
The rate cuts for the automobile sector are across different categories. It includes bikes (Upto 350 cc which includes bikes of 350cc), Buses, Small cars, Medium and luxury cars, Tractors (<1800cc), etc.
The rates are also being reduced on auto parts.
Lower GST will push demand, helping automobile manufacturers and the large ancillary industry (tyres, batteries, components, glass, steel, plastics, electronics, etc).
Rising sales of vehicles will increase orders for these components, creating a multiplier effect on MSMEs, which form a large part of this supply chain.
The entire auto industry directly and indirectly supports over 3.5 crore jobs in manufacturing, sales, financing, maintenance, etc.
A demand boost will lead to new hiring in dealerships, transport services, logistics, and component MSMEs.
Informal sector jobs (drivers, mechanics, small service garages) will also benefit.
Vehicle purchases are also credit-driven (NBFCs, banks, fintech lenders). A revival in auto sales will support retail loan growth, improve asset quality, and expand financial inclusion in semi-urban India.
Policy certainty through rational GST rates encourages fresh investments in the automobile sector. It will also promote Make In India and manufacturing sector.
GST rate Cuts will also encourage the replacement of old vehicles with new, fuel-efficient models, thereby supporting cleaner mobility.
Two-Wheelers (Bikes upto 350cc which incudes bikes of 350cc) – (28% to 18%)
Lower GST will reduce prices of bikes, making them more accessible to youth, professionals, and lower-middle-class households.
Bikes are the primary mode of transport in rural and semi-urban India; cheaper bikes will directly benefit farmers, small traders, and daily wage earners.
It is expected to help gig workers and boost the savings of the gig workers, through reduced costs and EMI for 2-wheeler loans.
Small Cars (GST down to 18%, from 28%)
Cars in the affordable segment will become cheaper, encouraging first-time buyers and expanding household mobility.
Reduced GST will stimulate sales in smaller cities and towns where small cars dominate.
Higher sales will benefit car dealerships, service networks, drivers, and auto-finance companies.
(covers petrol engine cars of <1200 cc and not exceeding 4 meters length and diesel cars of <1500 cc and not exceeding 4 metres length)
Large Cars (GST reduced to flat 40% with no cess)
Removal of the additional cess has not only reduced the rates but also makes taxation simple and predictable.
Even at 40%, the absence of cess will lower the effective tax on larger cars, making them relatively more affordable for aspirational buyers.
Bringing the tax rate to 40% and removing the cess will also ensure that these industries are eligible for ITC fully whereas previously the ITC could only be utilised up to 28% and not for the cess component.
Tractors (<1800 cc down from 12% to 5%)
Road tractors for semi-trailers (engine capacity more than 1800 cc down from 28% to 18%)
Tractor parts reduced to 5%
India is one of the world’s largest tractor markets; GST cut will push demand in both domestic and export segments.
The components for tractor manufacturing like tyres, gears etc will also be taxed at 5% only.
Ancillary MSMEs making engines, tyres, hydraulic pumps, and spare parts will benefit from higher production. The GST Cut will also strengthen India’s positioning as a global tractor manufacturing hub.
Increased affordability of tractors will increase mechanisation in the agriculture sector. This will improve the productivity of staple crops like paddy, wheat, etc.
Buses (seating capacity of 10+ persons) [GST down from 28% to 18%]
Lower tax rate will reduce the upfront cost of buses and minibuses (10+ seater).
This will spur demand from fleet operators, corporates, schools, tour operators, and state transport undertakings.
Affordable ticket fares for passengers (especially in semi-urban/rural routes).
Encourages shift from private vehicles to shared/public transport, reducing congestion and pollution.
Encourage fleet expansion & modernization.
Encourage use of public transport
Commercial Goods Vehicles (Trucks, delivery-vans, etc) [GST down from 28% to 18%]
Trucks are the backbone of India’s supply chain (carry 65%-70% of goods traffic).
Reducing GST reduces upfront capital cost of trucks, which lowers freight rates per tonne-km.
This has a cascading effect. It will lead to cheaper movement of agri goods, cement, steel, FMCG, and e-commerce deliveries. It will reduce inflationary pressures.
Supports MSME truck owners, who form a large share of India’s road transport sector.
Cheaper trucks directly help reduce logistics cost, improving export competitiveness.
Reduction of GST from 12%to 5% with ITC on third-party insurance of goods carriage also complements these efforts.
Does not include ‘Refrigerated motor vehicles’ (they have a separate classification).
Helps align with PM Gati Shakti & National Logistics Policy targets.
Auto components
The majority of the components used for the manufacture of Motor cars and Motor bikes, I.e the auto components, have also been reduced to 18%.
It is also important to note that the services associated with the transport of goods and passengers have also undergone significant changes and rationalisation. The rates have been reduced where necessary, and ITC has been passed on to avoid the cascading effect.
Further, the entire goods transportation and passenger transportation by road is given the options of two rates, i.e. 5% or 18% to choose as per the requirement of their business.
- 09 Sep 2025 06:24 PM
Govt allows revised MRP stickers on unsold stock after GST rate changes
Manufacturers and importers can adjust maximum retail prices to reflect new GST rates until 31 December, easing transition and reducing packaging waste.
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- 09 Sep 2025 06:46 PM
GST Rationalization Boosts Dairy Sector; Most Products Now at Nil or 5%
The 56th GST Council approved significant tax rationalizations for India’s dairy sector, effective September 22, 2025. This reform is one of the most extensive overhauls of GST rates for milk and milk products, with most now at a nil or 5% rate. The changes include reducing GST on UHT milk and pre-packaged paneer to nil, while butter, ghee, cheese, condensed milk, and certain milk beverages now have a 5% GST, down from 12%. Ice cream and milk cans also saw their GST rates drop to 5%. This move is expected to benefit over 8 crore rural farmer families and a large segment of consumers. By lowering operational costs and increasing competitiveness, the reforms aim to support the livelihoods of small farmers and landless laborers. As the world’s largest milk producer, with an output of 239 million tonnes in 2023-24, India’s dairy industry is a cornerstone of the agricultural economy, contributing 5.5% to the national GDP. The GST changes are projected to enhance the sector’s productivity and competitiveness, ensuring sustainable livelihoods for millions.
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- 09 Sep 2025 06:18 PM
Festive bonanza for car buyers: Kia, MG Motor among automakers announcing discounts after GST rate cuts
Kia India and MG Motor have reduced vehicle prices ahead of the festive season, effective from September 22, 2025, joining other carmakers such as Mahindra & Mahindra, Tata Motors, and the luxury brand BMW.
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- 08 Sep 2025 04:51 PM
Why now is the right time to invest in bonds
Investing in bonds is essential for portfolio diversification and stability, especially during equity market volatility. Recent economic changes and interest rate trends in India present a favorable opportunity for bond investments, with yields now more attractive than traditional fixed deposits.
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- 08 Sep 2025 05:06 PM
SAIL, JSW Steel to Tata Steel: Why are metal stocks skyrocketing today? Explained
Morgan Stanley expects select steel stocks to outperform the broader India Materials sector over the next few months. The brokerage upgraded its ratings on JSW Steel, Tata Steel, and SAIL, while maintaining an Equalweight stance on Jindal Steel & Power.
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- 08 Sep 2025 05:14 PM
Govt working on comprehensive package to support exporters hit by US tariffs: Sitharaman
New Delhi, Sep 8 (PTI) The government is working on a comprehensive package to support Indian exporters impacted by a steep 50 per cent tariff imposed by the US, Finance Minister Nirmala Sitharaman has said, asserting a multi-departmental engagement is underway to assess the impact on Indian shipments.
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- 08 Sep 2025 04:43 PM
GST rate cut euphoria fading away from the Indian stock market? Key challenges ahead
The Nifty 50 and Sensex started positively, driven by global signals and GST rate cuts, yet concerns linger about sustaining gains. Analysts suggest short-term global trends will dominate, while the GST reforms may boost consumer demand post-September 22.
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