GST Revision 2025 explained: Know what becomes cheaper and what gets expensive, from essentials and healthcare to luxury cars, tobacco, soft drinks, and gaming services.
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NEW DELHI: The Goods and Services Tax (GST) Council has rolled out the most comprehensive overhaul of India’s indirect tax system since GST’s introduction in 2017. The council’s decision to rationalize the slab structure from four rates (5%, 12%, 18%, and 28%) to just two main slabs, 5% and 18%, aims to simplify the system, boost domestic spending, and cushion the economic impact of US tariffs on Indian exports.
A special 40% slab has also been introduced for luxury and sin goods, such as high-end cars, tobacco, and aerated beverages.
The new rates will take effect on September 22, 2025, except for items such as tobacco, cigarettes, gutkha, and pan masala, which will remain under a separate structure.
What Gets Cheaper?
Two Main Slabs: GST now operates at just 5% and 18%, with a special 40% slab for sin and luxury goods.
Goods & Services Implementation: All changes, across goods and services, will be implemented from 22nd September 2025, except for pan masala, gutkha, cigarettes, zarda, unmanufactured tobacco, and bidis, which will retain existing GST and compensation cess rates until compensation cess liabilities are cleared.
Cheaper Essentials, Healthcare & More:
| Category | Examples |
|---|---|
| Food & Beverage | Nil GST on chapati, paranthas, UHT milk, paneer, pizza bread, khakra; 5% on butter, cheese, ghee, juices, cereals, namkeen, etc. |
| Household Items | Items like tooth powder, feeding bottles, tableware, kitchenware, umbrellas, utensils, bicycles, bamboo furniture, and combs will see a GST reduction from 12% to 5%. Similarly, shampoo, talcum powder, toothpaste, toothbrushes, face powder, soap, and hair oil will now attract only 5% GST, down from 18%. |
| Electronics & Appliances | 18% on air-conditioners, TVs, dishwashers (down from 28%). |
| Stationery & Education | Nil on maps, globes, pencils, crayons, notebooks; erasers also now nil. |
| Footwear & Textiles | 5% GST (down from 12%). |
| Healthcare | 5% or nil on life-saving drugs, thermometers, oxygen, diagnostics, glucometers, and spectacles. Life & health insurance is now GST-free. |
| Insurance & Services | Life & health insurance – nil; third-party insurance for goods carriage – 5%. |
| Hospitality & Travel | GST has been reduced from 12% with ITC to 5% without ITC. Hotel rooms priced up to Rs 7,500 will now attract 5% GST, and economy class flight tickets will also be taxed at just 5% |
| Automobiles & Components | 18% on small cars (≤350 cc) and motorcycles (≤350 cc); 18% uniform on auto parts. EVs remain 5%. |
| Construction & Agriculture | 5% on cement, tractors, agricultural machinery, fertilizers (sulphuric acid, nitric acid, ammonia), biopesticides, irrigation equipment, tractor parts. |
| Beauty & Well-being | 5% on shampoo, toothpaste, soap, kitchenware, feeding bottles, utensils, bamboo furniture, combs, and umbrellas. |
(All goods and services rates effective from 22 Sept 2025)
What Gets Expensive?
Aerated & Caffeinated Drinks:
- Soft drinks like Coca-Cola, Pepsi, and other sugary/caffeinated beverages: 40% GST (up from 28%).
- Flavoured and sweetened non-alcoholic beverages: taxed at 40%.
Luxury Vehicles:
- Cars above 1,200cc (longer than 4,000 mm), motorcycles above 350cc, yachts, racing cars, and private aircraft: 40% GST.
Tobacco Products:
- Tobacco, gutkha, bidi, zarda, cigarettes: remain at 28% + cess until state compensation loans are repaid; then moved to 40% GST.
Leisure & Gaming:
- Casinos, gambling, online money gaming, horse racing, and IPL tickets: 40% GST.
| Category | Details |
|---|---|
| Carbonated & Caffeinated Drinks | Soft drinks, caffeinated beverages, and flavoured drinks now taxed at 40% (up from 28%). |
| Luxury Vehicles | Cars above 1,200 cc (and longer than 4,000 mm), motorcycles above 350 cc, yachts, personal aircraft, and racing cars now at 40% GST. |
| Tobacco Products | Remain at 28% GST + compensation cess until loans are cleared; will shift to 40% GST after. |
| Leisure & Gaming Services | Casinos, horse racing, lotteries, online money gaming, and IPL tickets to attract 40% GST. |
Relief to Consumers
Consumer Relief: Everyday items like toothpaste, food staples, televisions, and footwear become more affordable—boosting household budgets and consumption.
Health & Safety: Access to essential medical devices, drugs, and insurance improves, supporting public welfare.
Agricultural & Rural Impact: GST cuts on fertilizers, tractors, and irrigation tools aim to uplift farmers.
Economic Boost: Expected to drive demand for cars, appliances, electronics—especially during the upcoming festive and Diwali seasons.
Government & Structural Reforms: Alongside tax rate cuts, the GST Council also greenlit operationalizing the GST Appellate Tribunal (GSTAT)—accepting appeals by the end of September and hearings beginning December 2025, and introduced trade facilitation measures such as automatic provisional refunds and simplified registration for low-risk small businesses
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