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India cuts consumption taxes, simplifies structure into two slabs

India's finance minister Nirmala Sitharaman said the Goods and Services Tax (GST) structure would be simplified from four slabs to two, with reductions across several sectors.

Nirmala Sitharaman

India's finance minister Nirmala Sitharaman said the Goods and Services Tax (GST) structure would be simplified from four slabs to two, with reductions across several sectors. (Photo: Getty Images)

Eastern Eye
By Eastern EyeSep 05, 2025
Eastern Eye

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INDIA announced a major cut in consumption taxes on Wednesday, days after the United States imposed steep tariffs on Indian goods.

India's finance minister Nirmala Sitharaman said the Goods and Services Tax (GST) structure would be simplified from four slabs to two, with reductions across several sectors. In some cases, levies have been reduced by more than half.

The tax changes will make a range of consumer goods, including soap bars and motorbikes, cheaper. However, the move could add pressure on government finances.

The announcement comes after US president Donald Trump imposed tariffs of up to 50 per cent on imports from India, raising concerns of a slowdown.

Sitharaman said the GST cuts were not linked to the tariff issue. "These reforms have been planned for a long time," she said.

India's prime minister Narendra Modi welcomed the measures. "The wide ranging reforms will improve lives of our citizens and ensure ease of doing business for all, especially small traders and businesses," his office said in a social media statement.

The revised system removes tax on insurance premiums, including life and health coverage. Levies on motorbikes and small cars have been reduced from 28 per cent to 18 per cent.

A finance ministry note also said dozens of life-saving drugs will now be tax exempt.


india economygst reformstax cutsnarendra modinirmala sitharamantrump tariffsgst

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