New GST Rates India 2025: Check What’s Cheaper, What’s Costlier

In the biggest revamp since the launch of the Goods and Services Tax (GST) in 2017, the GST Council on Wednesday slashed tax rates on household essentials, medicines, small cars, and appliances, while shifting luxury goods and sin products to a higher slab.

The reform narrows the current four-slab structure (5%, 12%, 18% and 28%) to just two — 5% and 18%. A new 40% slab will apply to select items such as luxury cars, aerated drinks, tobacco, and gambling services.

The new rates, effective September 22, exclude pan masala, gutkha, and tobacco products, which continue to attract cess until Covid-era compensation loans are cleared.

What Gets Cheaper

Food & Beverages

• Chapatis and paranthas to attract nil tax, down from 5%.
• UHT milk, paneer, pizza bread, and khakra shifted to nil tax.
• Common items like butter, ghee, nuts, confectionery, ice cream, biscuits, cornflakes, juices, namkeen, and beverages with milk cut to 5% from 18%.
• Plant-based and soya milk drinks slashed to 5%.
• Cheese and fats reduced to 5% from 12%.

Household Items

• Tooth powder, utensils, bicycles, bamboo furniture, combs, tableware, and umbrellas cut to 5% from 12%.
• Shampoo, soap, toothpaste, toothbrushes, face powder, hair oil reduced to 5% from 18%.

Appliances

• ACs, dishwashers, and TVs to be taxed at 18% instead of 28%.
• Stationery
• Maps, charts, globes, pencils, crayons, notebooks to attract nil tax.
• Erasers cut to nil from 5%.
• Footwear & Textiles
• Rates cut to 5% from 12%.
• Healthcare
• Life-saving drugs, oxygen, diagnostic kits, glucometers, test strips, corrective spectacles, thermometers reduced to 5% or nil.
• Health and life insurance policies made tax-free.

Insurance & Services

• Third-party goods carriage insurance cut to 5% with ITC (from 12%).
• Gym, yoga, salons, barbers, and wellness services reduced to 5% without ITC (from 18%).

Hotels & Flights

• Hotel rooms up to ₹7,500 now at 5% without ITC.
• Economy air tickets to attract just 5% GST.

Vehicles & Auto Components

• Motorcycles up to 350cc and small hybrid cars taxed at 18% from 28%.
• Auto components now at 18% from 28%.
• EVs continue at 5% GST.
• Cement cut to 18% from 28%.

Agriculture & Machinery

Tractors, engines under 15HP, hand pumps, sprinklers, and soil prep/harvesting machinery cut to 5% from 12%.

Fertiliser inputs like sulphuric acid, nitric acid, ammonia reduced to 5% from 18%.

Neem-based pesticides and micronutrients cut to 5% from 12%/18%.

Tractor tyres, tubes, pumps, gearboxes, and parts reduced to 5% from 18%.

 What Gets Costlier

• Aerated & Sweetened Beverages
• Coca-Cola, Pepsi, other soft drinks and caffeinated beverages to attract 40% GST (up from 28%).
• All flavoured and sweetened drinks to move to 40% slab.

Automobiles & Luxury Vehicles

• Cars above 1,200cc, long sedans, SUVs, racing cars, motorcycles above 350cc, yachts, and private aircrafts will face 40% GST.

Tobacco Products

• Continue under 28% + cess until Covid revenue loans are repaid. Later, will shift to 40% GST slab.

Leisure & Gambling

• Casinos, online gaming, horse racing, race clubs, and lottery services to attract 40% GST.

Why It Matters

The government expects the simplified two-slab GST system to boost consumption, reduce compliance burden, and support domestic demand — especially amid the economic pressure caused by US tariffs on Indian exports.