India’s Goods and Services Tax (GST) has undergone its biggest transformation since its launch in 2017. The GST Council has approved a sweeping rate revamp, reducing the four-slab structure (5%, 12%, 18%, and 28%) to just two main slabs: 5% and 18%, with a special 40% luxury tax slab for select items.
The decision is expected to reshape consumer spending, impact household budgets, and alter how Indians experience everyday essentials, from toothpaste and kitchenware to cars, cement, and even insurance policies.
If you’ve been wondering what’s set to get cheaper and what might burn a deeper hole in your pocket, here’s the complete breakdown of the new GST rates effective September 22, 2025.
Why This GST Revamp Matters?
Since GST’s rollout in July 2017, it has been one of the most ambitious tax reforms in India. But over the years, businesses and consumers have often complained about its complicated slab structure. Multiple rates confused, and critics argued that GST sometimes raised costs on daily essentials instead of easing them.
The 2025 revamp is a corrective move. By cutting slabs and lowering taxes on essentials, the government hopes to:
- Boost consumer spending at a time when inflation has pressured households.
- Support domestic industries by making mass-market goods more affordable.
- Offset global trade challenges, especially after tariffs on Indian goods by the US.
Now, with most goods moving into the 5% and 18% slabs, the structure is much simpler, and consumers finally get clarity on what they’ll be paying at the counter.
What Gets Cheaper Under New GST Rates?
The good news for households: several daily-use items and essentials will now cost less.
1. Food and Beverages
Indians love their food, and this revamp makes everyday meals more affordable.
- Chapati and Paranthas: Now completely exempt (Nil GST, down from 5%).
- Paneer, Pizza Bread, Khakra, UHT Milk: Also exempt from GST.
- Butter, Ghee, Dry Fruits, Sausages, Jams, Fruit Jellies, Tender Coconut Water: Slashed to 5% from 18%.
- Biscuits, Ice Cream, Pastries, Namkeen, Breakfast Cereals: Cut to 5% from 18%.
- Plant-Based Milk Drinks: Down to 5% from 18%.
- Soya Milk Drinks: Reduced to 5% from 12%.
Impact: The Indian middle class will feel direct relief, as milk products, snacks, and packaged foods form a major share of daily spending.
2. Household Essentials
From your bathroom shelf to the kitchen cupboard, several items are cheaper now:
- Toothpowder, Feeding Bottles, Kitchenware, Tableware, Umbrellas, Bicycles, Bamboo Furniture, Combs: Down to 5% from 12%.
- Shampoo, Toothpaste, Soap, Hair Oil, Talcum Powder, Face Powder: Reduced to 5% from 18%.
Impact: Lower costs in personal care products make grooming and hygiene more affordable, especially for larger families.
3. Consumer Electronics and Appliances
Big-ticket purchases get friendlier too:
- Air-Conditioners, Dishwashers, TVs (up to 32 inches): Now at 18%, reduced from 28%.
Impact: Middle-class families upgrading their homes with appliances will see meaningful savings.
4. Stationery and Education Supplies
Education becomes more affordable with Nil GST on:
- Maps, Charts, Globes, Pencils, Sharpeners, Crayons, Exercise Books, Notebooks, Erasers.
Impact: Direct relief for parents, schools, and students across India.
5. Footwear and Textiles
- Footwear and Garments: Slashed from 12% to 5%.
Impact: Mass-market clothing and shoes, especially for rural and semi-urban India, become cheaper.
6. Healthcare and Medicines
Healthcare costs are down with massive cuts:
- Thermometers: 18% → 5%.
- Medical Grade Oxygen, Diagnostic Kits, Glucometers, Corrective Spectacles: 12% or 18% → 5%.
- Life-Saving Drugs: Now at 5% or Nil.
Impact: Affordable healthcare means more accessibility for low and middle-income families.
7. Insurance and Policies
- Life and Health Insurance: Nil tax now.
- Goods Carriage Insurance: Down to 5% with ITC, from 12%.
Impact: Reduced insurance costs encourage more Indians to get insured.
8. Hotels and Travel
- Hotel Rooms up to ₹7,500: Now at 5% (earlier 12%).
- Economy Flight Tickets: GST cut to 5%.
Impact: Domestic tourism is expected to see a boost.
9. Vehicles and Auto Components
- Motorcycles up to 350cc: 18% (from 28%).
- Small Hybrid Cars: Reduced GST.
- EVs: Still at 5% (unchanged).
- Auto Components: 18% (from 28%).
Impact: Affordable mobility could drive higher vehicle sales.
10. Fuel and Energy
- Petrol, LPG, CNG, Small Cars and Diesel Cars under 1500cc: 18% (from 28%).
Impact: Cleaner and smaller vehicles become more attractive.
11. Construction and Housing
- Cement: 18% (from 28%).
Impact: Housing and infrastructure projects become cheaper, boosting real estate.
12. Agriculture and Farming
Big relief for India’s farmers:
- Agricultural Machinery: 12% → 5%.
- Fertiliser Inputs (Ammonia, Sulphuric Acid, Nitric Acid): 18% → 5%.
- Bio-Pesticides (Neem-Based, Bacillus, etc.): 12% → 5%.
- Tractor Parts (Tyres, Gearboxes, Radiators, etc.): 18% → 5%.
Impact: Lower farming costs help improve margins for farmers and reduce food inflation.
13. Fitness and Beauty Services
- Gyms, Salons, Yoga, Health Clubs: 5% (down from 18%).
Impact: The wellness industry could see more footfall.
What Gets Costlier Under New GST Rates?
While most essentials are cheaper, certain luxury and lifestyle products will pinch more.
1. Aerated and Caffeinated Beverages
- Soft Drinks like Coca-Cola, Pepsi: 40% (from 28%).
- Caffeinated Drinks like Energy Drinks: 40% (from 28%).
- Flavoured Sugary Beverages: 40% (from 28%).
Impact: Aimed at discouraging unhealthy consumption, but will impact urban youth and restaurants.
2. High-End Vehicles and Automobiles
- Cars above 1200cc and over 4000mm length, Bikes over 350cc: 40% slab.
- Yachts, Aircraft for Personal Use, Racing Cars: 40% levy.
Impact: Luxury segment takes a hit, while small car buyers benefit.
3. Tobacco and Cigarettes
- Tobacco Products: Continue at 28% plus Cess, moving to 40% slab after repayment of Covid-related state compensation loans.
Impact: Higher deterrent for smokers, aligning with public health goals.
4. Leisure and Gambling Activities
- Casinos, Online Gaming, Horse Racing, Lotteries: 40%.
- IPL Tickets: Under 40% slab.
- Race Clubs and Rentals: Higher levy.
Impact: Entertainment gets pricier, but largely affects upper-income groups.
Expert Take: Who Wins and Who Loses?
Winners:
- Middle-class households (cheaper groceries, toiletries, medicines).
- Students (no tax on stationery).
- Farmers (agriculture inputs are cheaper).
- Tourism and hospitality (lower room tariffs, flights).
Losers:
- Luxury lifestyle consumers (cars, yachts, gaming).
- Beverage industry (soft drinks and energy drinks face a higher demand drop).
- Tobacco industry (heavier taxation).
Q1. From when will the new GST rates apply?
September 22, 2025.
Q3. What is the new GST structure?
Only 3 slabs now - 5%, 18%, and a special 40% luxury rate.
Q4. Which goods have 0% GST now?
Chapati, paneer, stationery items, some medicines, and health insurance.
The GST revamp of 2025 is a game-changer for India’s tax system. By reducing everyday essentials to 5% or even Nil and hitting luxury and lifestyle segments with a steep 40%, the government is making consumption more equitable.
For the average household, life just got a little cheaper, from groceries to shampoos and medicines. For businesses in real estate, farming, and healthcare, the cuts could mean stronger demand.
But for luxury car buyers, soft drink lovers, and gamblers? Things are about to become significantly more expensive.
One thing is clear: GST 2.0 is here, and it will reshape how India spends and saves in 2025 and beyond.
Also Read: GST Ke Naye Rate: Kya Hua Sasta, Kya Hua Mehnga?
About the Author:
Akanksha Sinha
I'm Akanksha Sinha, an expert in writing sports blogs, news, and various articles for entertainment and more. I bring a unique flair to my work, providing insightful perspectives on the world of sports.
My articles aim to inform and entertain, making me a go-to source for sports enthusiasts seeking a blend of information and enjoyment. With a passion for storytelling and a keen eye for detail, I consistently deliver compelling narratives that resonate with a diverse audience.
