GST

The goods and services tax rests on the Constitution (101st Amendment) Act, 2016, which lets both Parliament and the state legislatures make GST laws. Its rates and rules are recommended by the GST Council, a constitutional body made up of the Union Finance Minister, the Minister of State for Revenue or Finance, and a minister from each state.

Where things stand

Since 22 September 2025, most goods and services fall into two slabs: a merit rate of 5% and a standard rate of 18%. A de-merit rate of 40% applies to a short list of goods, including pan masala, cigarettes, aerated drinks and motorcycles above 350 cc. Pan masala, cigarettes and most other tobacco products moved to 40% on 1 February 2026, when the compensation cess ended; biris are taxed at 18%.

The 57th GST Council meeting on 8 October 2026 left the slabs alone. It recommended withdrawing officers’ arrest powers, raising the prosecution threshold to ₹5 crore, ending show cause notices for demands under ₹10,000 and provisionally sanctioning 90% of zero-rated and inverted-duty refund claims automatically. These take effect only through circulars, notifications and, where needed, amendments to the Central and state GST laws.

Collections remain strong. Gross GST was about ₹2.04 lakh crore in September 2026, up 14.7% on a year earlier.

Recent milestones

1. 3 Sep 202556th Council approves the 5% and 18% structure
2. 22 Sep 2025New rates take effect
3. 1 Feb 2026Compensation cess ends; tobacco and pan masala at 40%
4. 8 Oct 202657th Council recommends ending arrest powers and faster refunds
5. 1 Nov 2026Refunds on input services under inverted duty apply to credit from this date

Key numbers

• 5% / 18% / 40%merit, standard and de-merit rates
• ₹2.04 lakh croregross GST, September 2026 (provisional)
• ₹12.46 lakh croregross GST, April to September 2026, up 11.6%
• ₹5 croreproposed prosecution threshold, up from ₹1 crore

Key questions

Did the 57th Council change any rates? It kept the slabs unchanged. A few item-level decisions were made, such as NIL GST on psyllium seeds and 5% on delivery services through e-commerce operators.

Are arrest powers already gone? No. The Council recommended omitting section 69 of the Central GST Act, which needs a law amendment. The Finance Minister said the agenda items would be implemented from 1 April 2027, according to Deccan Chronicle.

Who decides GST rates? The GST Council recommends them. The Centre holds one-third of the voting weight and the states two-thirds, and a proposal needs three-fourths of the weighted votes to pass.

What replaced the compensation cess on tobacco? From 1 February 2026, an additional excise duty on tobacco products and a Health and National Security Cess on pan masala, both on top of 40% GST, PTI reported.