Short Info: The GST Council, under Union Finance Minister Nirmala Sitharaman, has implemented “Next-Gen” GST reforms that simplify the tax structure into two main slabs 5 % and 18 % and introduced a special 40 % slab for “sin” and luxury goods. These changes are effective from 22 September 2025. Essentials like milk, medicines, insurance, and basic food items now attract lower or nil taxes, while vehicles and automobiles get tax cuts, and high-end goods face steeper taxation.
Important Dates
| Event | Date / Note |
|---|---|
| GST Council Meeting | 4 September 2025 (56th Council Meeting) |
| Implementation Date of New Rates | 22 September 2025 (Navratri) |
| Luxury / Sin Goods (with Cess) | Old rates continue until cess repayment notified |
GST Rate Structure 2025
| GST Slab | Applies To | Remarks |
|---|---|---|
| Nil (0 %) | Ultra-H-T milk, paneer, roti/paratha, life-saving & cancer drugs, health/life insurance, education tools | Essential relief for households |
| 5 % | Daily essentials (soaps, hair oil), butter, ghee, cheese, packaged foods, insurance (nil), farm equipment | Merit goods reduced for affordability |
| 18 % | Appliances, TVs, cement, small cars (<4 m, <1,200 cc), bikes <350 cc, consumer durables | Standard goods and vehicles |
| 40 % | Pan masala, cigarettes, gutkha, tobacco, aerated drinks, luxury items, large bikes/cars | “Sin” and luxury goods; cess merged |
Detailed List of Goods and GST Rates on Them
Here is a list of items and their new GST rates:
Nil GST Rate (0%)
Food Items: Ultra-High Temperature (UHT) milk, pre-packaged and labelled chena or paneer, roti, chapati, paratha, khakra, gur (jaggery), besan (gram flour), and unpacked food grains.
Health & Insurance: 33 life-saving drugs and individual life and health insurance premiums.
Education: Children’s drawing and coloring books, pencils, sharpeners, crayons, pastels, exercise books, notebooks, and erasers.
5% GST Rate
Personal & Household Items: Hair oil, shampoo, toothpaste, dental floss, tooth powder, shaving cream, shaving lotion, aftershave, toilet soap, bicycles, tableware, kitchenware, and handcrafted candles.
Packaged Foods: Packed paneer, tea, coal, edible oils, raisins, roasted coffee beans, skimmed milk powder, cashews, packaged namkeens, bhujia, sauces, pasta, chocolates, preserved meat, and cornflakes.
Medical & Healthcare: Medicines (Ayurveda, Unani, Homoeopathy), medical oxygen, thermometers, surgical instruments, diagnostic kits, glucometers, and corrective spectacles.
Agriculture: Tractors, fertilizers, biopesticides, agricultural machinery (harvesters, threshers, sprinklers, drip irrigation), and tires and parts for tractors.
Services: Hotel stays up to ₹7,500 per day, salons, gyms, barbers, and yoga centers.
18% GST Rate
Consumer Durables: Televisions (all sizes), air conditioners, dishwashers, and refrigerators.
Automobiles: Small cars (petrol, diesel, and hybrids) and two-wheelers with an engine capacity of 350cc or less. All auto parts, buses, trucks, and three-wheelers are also in this slab.
Construction: Cement.
40% GST Rate
Luxury & Sin Goods: Pan masala, tobacco, cigarettes, and high-end cars.
Applicability
- All registered taxpayers in India subject to GST must comply with new slabs.
- Exemptions & Updated Classifications: Items like medicines, insurance, basic food fall under new slabs or 0%.
- Vehicles: Small cars and two-wheelers now attract 18% GST, while larger/luxury vehicles are at 40%.
- Sin/Luxury Goods: Continue under old rates plus cess until officially notified otherwise.
Refer official notifications for HSN codes and precise classifications.
Benefits & Impacts
Affordable Essentials: Household staples, medicines, and insurance become more accessible through tax cuts.
Automobile Relief: Small cars and scooters see 12–12.5% drop in prices due to reduced GST.
Consumer Sentiment & Demand: Simplified rates expected to boost consumption ahead of festive season.
GST Reforms Overview
- GST Council Approval: Reforms approved on 4 September 2025 at the 56th meeting.
- Implementation: New slabs effective from 22 September 2025.
- Sin Goods Transition: Continue at old rates with cess until loan/cess clearance notified.
Taxpayers must monitor updates for effective dates and applicability.
How to Access
- Visit the Central Board of Indirect Taxes & Customs (CBIC) website and refer to the “Goods and Services Rates” section for HSN-wise rates.
- Download the official GST rates PDF/notification released post-meeting.
- Use updated GST software/plugins or consult your tax professional to apply new rates to billing.
Official gazette notifications provide final, legally binding details on GST revisions.
Important Links
| Purpose | Link |
|---|---|
| CBIC GST Rate Schedule | CBIC GST Rates Page |
| Latest GST Council Reforms (Press Release) | PIB – GST Reforms 2025 |
| Download New GST Rates PDF | Download PDF |
Frequently Asked Questions (FAQs)
1. When do the new GST rates come into effect?
They become effective from 22 September 2025 (start of Navratri).
2. Which goods now attract 0% GST?
Basics like UHT milk, paneer, roti/paratha, life-saving/cancer medicines, and health or life insurance are now exempt.
3. What items fall under the 5% slab?
Daily essentials including soaps, hair-oil, butter, ghee, packaged foods, farm equipment, and some electronics now attract 5%.
4. How has vehicle taxation changed?
Small cars (<1,200 cc and <4 m) and bikes under 350 cc now taxed at 18%; luxury vehicles move to 40%.
5. What about “sin” goods like tobacco and aerated drinks?
They’re now taxed at 40%. Until further notification on cess repayment, some may continue under old rates.