India just unveiled a major revamp of the Goods and Services Tax (GST), slashing complexity and bringing a wave of tax relief across categories. Here’s your fresh guide to what’s changing—effective from September 22, 2025.
Streamlined Tax Rates
The GST Council has shifted from four tax slabs (5%, 12%, 18%, 28%) to a simpler framework of just three effective rates:
- 0% on select staples and essentials
- 5% on a wide range of everyday goods
- 18% on various products previously taxed higher
- 40% “special rate” on certain luxury or harmful items (often dubbed “sin goods”)
What Is Getting Cheaper?
1. Food & Groceries
- 0% GST: Chapatis, parathas, UHT milk, paneer, khakhra, snack breads like pizza bread
- 5% GST: Butter, ghee, cheese, dry fruits, condensed milk, sugar-based sweets, jams, nutty snacks, cornflakes, ice cream, juice packs, tender coconut water, plant-based milk drinks
2. Household & Personal Care Items
Most daily-use products have dropped to 5%:
- Toothpaste, talcum powder, shampoo, soap, toothbrushes, face powders, hair oil, feeding bottles, utensils, kitchenware, umbrellas, bicycles, bamboo furniture, combs
3. Electronics & Appliances
- TVs, air conditioners, dishwashers: tax reduced from 28% to 18%
4. Stationery & Education Tools
- Erasers, globes, maps, globes, notebooks, crayons, pencils: now 0% GST (down from 5–12%)
5. Footwear & Textiles
- GST trimmed from 12% to 5%, especially benefiting mass-market items
6. Healthcare & Insurance
- Life-saving drugs, medical devices, medicines, diabetic strips, thermometers: 5% or zero GST
- Life and health insurance (individual): now exempt from GST
- Third-party commercial vehicle insurance: 5% with ITC, down from 12% with ITC
7. Hotels & Air Travel
- Rooms up to ₹7,500: GST now 5% (previously 12% with ITC)
- Economy airfares: also 5% GST
8. Automobiles & Vehicle Parts
- Bikes up to 350 cc: GST dropped to 18% (from 28%)
- Small hybrid and small cars: 18%
- Electric vehicles: maintained at 5%
- Auto spare parts: 18%, down from 28%
9. Construction & Agricultural Machinery
- Cement: 18% (down from 28%)
- Tractors, soil machines, pumps, fertilizers, micronutrients, hand carts, engine parts: 5% down from 12–18%
10. Beauty & Wellness Services
- Salons, gyms, yoga centers, fitness classes: now 5% GST (previously 18% with ITC)
What’s Becoming Costlier?
The new 40% “sin tax” slab applies to a focused list of items—aimed at discouraging unhealthy or luxury consumption:
- Sugary and carbonated drinks, caffeinated beverages, aerated waters with additives: 40% GST (up from 18–28%)
- Tobacco products: pan masala, gutkha, cigarettes, chewing tobacco, bidi, etc. will shift from the old cess structure to the new slab once dues are repaid
In automobiles:
- Luxury cars beyond 1,200 cc (petrol) or 1,500 cc (diesel), SUVs, yachts, private aircraft, racing cars and motorcycles above 350 cc: 40% GST
Summary Table
| Category | GST Now | Earlier GST |
|---|---|---|
| Basic food & wearables | 0% / 5% | 5% – 28% |
| Electronics & appliances | 18% | 28% |
| Essentials & services | 5% or 0% | 12% – 18% |
| Healthcare & medicine | 5% or exempt | 12% – 18% |
| Insurance | Exempt / 5% | 12% |
| Transportation | 18% / 5% (EVs) | 28% / 12% |
| Luxury / sin goods | 40% (new slab) | 28% + cess |
In Brief
From September 22, 2025, households can expect widespread GST relief on essentials—boosting affordability across food, healthcare, electronics, insurance, and transportation. At the same time, indulgences and products deemed harmful—including sugary drinks, tobacco, and luxury vehicles—are now significantly more expensive.
Reference is taken from here