New Delhi [India], September 4 : Several industry associations have welcomed the Centre's move to rationalise GST rates to two slabs of 5 per cent and 18 per cent.
Director General of Confederation of Indian Industry (CII) Chandrajit Banerjee called the GST reforms a "phenomenal milestone".
Issuing a statement, Chandrajit Banerjee said, "This move on GST reforms is a phenomenal milestone. CII not just welcomes the GST Council's forward-looking decisions, moving to two rates of 5 per cent and 18 per cent from September 22, simplifying refunds and MSME procedures, and exempting individual life and health insurance from GST, but also sees this as path-breaking."
"This clarity will ease compliance, reduce litigation, and give businesses and consumers the predictability they need," the statement added.
He added that the tax cut on essential goods will provide relief to families.
"By lowering rates on everyday items and critical inputs, the reforms provide immediate relief to families and strengthen the foundation for growth. CII strongly holds the view that the Industry would swiftly pass benefits to the consumers and partner with the Government to ensure a smooth, timely rollout that lifts demand and supports jobs," the statement by CII Director General said.
Confederation of Indian Textile Industry (CITI) Chairman Rakesh Mehra lauded the GST Council's decision to correct the inverted duty structure for the manmade textile sector and said that the move will ease liquidity pressures.
In a statement, Rakesh Mehra said, "We thank and welcome the rectification of the GST inversion in the Man-Made Fibre (MMF) value chain by aligning MMF fibre and yarn at 5 per cent from 18 per cent and 12 per cent, respectively. It addresses the long-standing blockage of working capital for thousands of spinners and weavers. With over 70-80 per cent of textile and apparel units in India being MSMEs, this reform will directly benefit a large segment of the industry by easing liquidity pressures, enhancing competitiveness."
The GST Council had announced a correction of the long-pending inverted duty structure for the man-made textile sector by reducing the GST rate on man-made fibre from 18 per cent to 5 per cent and man-made yarn from 12 per cent to 5 per cent.
Hemant Jain, President of PHD Chamber of Commerce and Industry (PHDCCI), said that the GST rate rationalisation will ease household budgets and stimulate demand in the economy.
"The roll-out of GST rate rationalisation from September 22, 2025, is a landmark reform that addresses both consumer welfare and revenue efficiency. By reducing rates on daily essentials such as toiletries, packaged foods, and utensils from 18-12 per cent to 5 per cent, the reform will ease household budgets and stimulate demand," Hemant Jain said in a statement.
He called the decision to levy zero GST on health insurance, medical oxygen, and diagnostic kits a "socially progressive step".
He said, "In agriculture, lowering GST on tractors, tyres, irrigation systems, and farm machinery to 5 per cent will cut input costs and directly benefit farmers. Affordable access to healthcare, through Nil GST on insurance, medical oxygen, and diagnostic kits, marks a socially progressive step, while reduced levies on education items will strengthen human capital. Equally, bringing down GST on automobiles, appliances, and electronics will boost industry volumes and create multiplier effects in manufacturing and jobs."
"PHDCCI strongly welcomes these measures, as they simplify compliance, spur consumption, and ensure states gain from an expanded tax base, setting India firmly on the path of growth and inclusivity," Hemant Jain said in the statement.
This comes as the GST council decided to rationalise GST rates to two slabs of 5 per cent and 18 per cent by merging the 12 per cent and 28 per cent rates.