The Goods and Services Tax (GST) Council has approved a major overhaul of India’s GST structure, effective September 22, 2025. This is the first significant revamp since GST’s launch in 2017 and aims to boost domestic spending while cushioning the impact of US-imposed tariffs on Indian goods.

The GST slabs have been simplified from four rates – 5%, 12%, 18%, and 28% – to two primary rates: 5% and 18%. Additionally, a special 40% slab will apply to high-end cars, tobacco, and luxury items.

Here’s a detailed look at what will get cheaper and costlier after the GST revamp.

What Gets Cheaper Under the New GST Rates

Food and Beverages

Nil GST: Chapati, parathas, ultra-high temperature (UHT) milk, chena/paneer, pizza bread, and khakra.
5% GST: Butter, ghee, dry nuts, condensed milk, sausages, meat, sugar-based sweets, jams, fruit jellies, tender coconut water, 20-litre bottled water, fruit pulp, milk-based beverages, ice cream, pastries, biscuits, cornflakes, cereals, sugar confectionery.
Plant-based & soya milk drinks: Tax reduced from 18%/12% to 5%.
Other fats and cheese: Reduced from 12% to 5%.

Household Items

Items like tooth powder, feeding bottles, kitchenware, umbrellas, utensils, bicycles, bamboo furniture, and combs: Tax cut from 12% to 5%.
Personal care products like shampoo, talcum powder, toothpaste, toothbrushes, face powder, soap, and hair oil: Reduced from 18% to 5%.

Household Appliances

Electronics like air conditioners, dishwashers, and TVs: Tax reduced from 28% to 18%.

Stationery

Items including maps, charts, globes, pencils, sharpeners, crayons, pastels, exercise books, and notebooks: Tax reduced to nil.
Erasers: Reduced from 5% to nil.

Insurance & Policies

Individual life and health insurance: Nil GST.
Third-party insurance of goods carriage: Reduced from 12% (with ITC) to 5% (with ITC).

Hotel & Flight Services

Hotel rooms up to Rs 7,500: Reduced from 12% (with ITC) to 5% (without ITC).
Economy class flight tickets: GST reduced to 5%.

Vehicles & Auto Components

Motorcycles up to 350 cc and small hybrid cars: Tax reduced from 28% to 18%.
Electric vehicles: Continue at 5% GST.
Auto components: Reduced from 28% to 18%.
Petrol, LPG, CNG vehicles (<1,200 cc), and diesel vehicles (<1,500 cc): Reduced from 28% to 18%.

Construction & Machinery

Cement: Reduced from 28% to 18%.
Sewing machines & parts: Reduced from 12% to 5%.
Agricultural machinery (tractors, pumps, nozzles, sprinklers, soil preparation and harvesting machines): Reduced from 12%/18% to 5%.
Fertilizers and biopesticides: Tax reduced from 18%/12% to 5%.

Beauty & Fitness Services

Health clubs, salons, barbers, fitness centers, yoga classes: Reduced from 18% to 5% GST (without ITC).

What Gets Costlier Under the New GST Rates

Aerated & Caffeinated Drinks

Soft drinks like Coca-Cola and Pepsi and other carbonated beverages: Tax increased from 28% to 40%.
Other non-alcoholic beverages with added sugar or flavoring: GST raised from 18%/28% to 40%.

Vehicles

Automobiles above 1,200 cc, longer than 4,000 mm, motorcycles above 350 cc, yachts, aircrafts for personal use, and racing cars: Tax increased to 40%.

Tobacco Products

Tobacco, cigarettes, and other related products: Remain at 28% GST plus compensation cess until state revenue loans are repaid; afterward, GST will be 40%.

Leisure & Entertainment

Race club services, casinos, gambling, horse racing, lottery, online gaming, and IPL tickets: Tax increased to 40%.

The GST overhaul aims to make daily essentials, household items, small vehicles, and agricultural machinery more affordable. Luxury items, high-sugar beverages, and large vehicles will become more expensive, encouraging responsible consumption. These changes are effective from September 22, 2025, with a simplified structure that should make compliance easier for businesses.

Source: NDTV

GST Revamp 2025