Port Blair, Sept. 24: In what could reshape the spending habits of households and ease the cost of living, the 56th GST Council Meeting has rolled out sweeping tax reforms that kick in from September 22 across the Andaman & Nicobar Islands. From daily groceries and personal care items to medicines, health insurance, and even small cars, the new regime promises to put more money back in the people’s pockets.
The biggest takeaway is the exemption of GST on all life and health insurance policies — including term life, ULIPs, endowment schemes, family floater health plans and senior citizen policies. The move, officials said, is aimed at making insurance affordable for the common man and expanding coverage in the country.
The council has also rationalised the existing four-tier GST structure into a simpler two-rate system: a Standard Rate of 18% and a Merit Rate of 5%, with a special de-merit rate of 40% for select luxury and sin goods.
For households, the relief is immediate and visible. Hair oil, soaps, shampoos, toothpaste, bicycles, tableware, and kitchenware will now attract just 5% GST, down from 12–18%. Ultra-High Temperature (UHT) milk, paneer, and all varieties of Indian bread — chapati, paratha, parotta — have been brought to the zero-tax slab. A wide range of packaged foods — namkeens, noodles, sauces, chocolates, cornflakes, butter, ghee, coffee, and preserved meat — will also now be taxed at only 5%.
Healthcare too sees a major push. Thirty-six lifesaving drugs, including those used in cancer and rare disease treatment, have been made completely tax-free, while GST on all other medicines has been reduced from 12% to 5%. Medical devices, diagnostic kits, glucometers, bandages, and surgical equipment will also see steep tax cuts.
The auto and transport sector is not left out. GST on small cars and motorcycles up to 350cc has been slashed from 28% to 18%, along with buses, trucks, and ambulances. All auto parts now carry a uniform 18% rate. Cement too sees a major cut — from 28% to 18%.
In a boost to farmers, GST on tractors, soil preparation and harvesting machinery has been reduced to 5%. The textile and fertilizer sectors benefit from long-pending corrections in inverted duty structures, with manmade fibre and yarn, as well as key fertilizer chemicals, now taxed at just 5%. Renewable energy devices and even budget hotel stays under ₹7,500 per day are now cheaper under the new slabs. Even lifestyle services have been reimagined: gyms, salons, barber shops, and yoga centres — all taxed at 5% instead of 18%.
The UT GST Department has warned that all businesses in the Islands must comply with the new structure starting September 22, 2025. Citizens facing non-compliance or seeking clarifications can lodge grievances via WhatsApp on 9595359698.
With the sweeping changes, officials claim the GST Council has not just simplified taxation but also given a direct relief to households, patients, farmers, and small businesses — signalling a shift from a complex regime to a more citizen-friendly “simple tax.”
