The 56th GST Council meeting, held on September 3, 2025, has ushered in one of the most significant overhauls of India’s Goods and Services Tax regime since its inception. As part of the GST 2.0 reforms, the Council has simplified the tax structure and expanded the Nil (0%) GST slab to cover a wider range of essential goods and services. The changes officially take effect from September 22, 2025, aiming to reduce the cost of living, boost consumption, and ease compliance for businesses.
Key Products Now Under the Nil GST Slab
Under the revised structure, several essential items have been moved to the 0% GST category, meaning no tax will be levied on their sale. These include:
Dairy products such as fresh milk, curd, paneer, and butter (excluding certain processed or flavoured variants)
33 life-saving drugs and critical medicines used in the treatment of chronic and rare diseases
Educational essentials like textbooks, exercise books, and certain stationery items
Basic healthcare services including individual health and life insurance premiums
Select agricultural goods and irrigation equipment to support the farming sector
Why the Change Matters
By expanding the Nil slab, the government aims to make essential goods more affordable for the public while reducing the tax burden on households. For businesses, especially small traders and retailers, the move simplifies billing and compliance for these items. However, the shift also impacts input tax credit (ITC) claims, as businesses will no longer collect output GST on these products.
We What’s Not Included
Despite the relief on essentials, the Council has kept luxury goods, tobacco products, pan masala, and high-end beverages in the higher 40% slab or under compensation cess. This ensures that revenue from non-essential and demerit goods continues to support government spending.
The GST Nil slab expansion is being hailed as a pre-festive season relief for consumers, with the expectation that retail prices for these goods will drop in the coming weeks. Businesses are advised to update their billing systems, revise MRPs where applicable, and train staff to explain the changes to customers.