New GST Structure (Effective 22 September 2025)

 

New GST Structure (Effective 22 September 2025)

1. Simplified Tax Slabs

• The GST Council has consolidated the existing four tax slabs into two primary slabs—5% and 18%—making the system more streamlined.The Economic TimesReutersThe Times of India

• A special 40% slab has been introduced for luxury and "sin goods" (e.g., high-end vehicles, tobacco, casinos, lotteries).Reuters+1The Times of IndiaIndia TodayJagranjosh.comPress Information Bureau

2. Items Now at 5% GST

Many everyday essentials and services are now taxed at this lower rate:

• Daily essentials: soaps, shampoos, toothpaste, hair oil, packaged foods, ghee, cheese, paneer, UHT milk, ice cream, rotis, namkeen.ReutersIndiatimesUpstox - Online Stock and Share TradingThe Times of IndiaJagranjosh.comHindustan Times

• Dairy products: Most—such as paneer, butter, cheese, UHT milk—see GST reduced to 5% (some exempt to 0%).Upstox - Online Stock and Share TradingThe Times of IndiaJagranjosh.com

• Bicycles & parts: Slashed from 12% to 5%.Upstox - Online Stock and Share TradingPress Information Bureau

• Beauty & fitness services: Salons, gyms, yoga centers now taxed at 5% (down from 18% with input tax credit).Upstox - Online Stock and Share Trading

• Health & life insurance policies: Now fully GST-exempt (0%).ReutersThe Times of IndiaUpstox - Online Stock and Share Trading

3. Items Now at 18% GST

Several categories have shifted from higher rates:

• Consumer electronics: TVs, ACs, refrigerators, dishwashers and other appliances moved down from 28% to 18%.The Times of IndiaReuters+1

• Small cars, three-wheelers, buses, trucks, auto parts: Reduced from 28% to 18%. Small cars include petrol/LPG up to 1200 cc or diesel up to 1500 cc and length up to 4,000 mm.Upstox - Online Stock and Share TradingPress Information Bureau

• Cement: Now 18% instead of 28%.Upstox - Online Stock and Share TradingReuters

• Motorcycles up to 350 cc: GST reduced to 18% from 28%.Upstox - Online Stock and Share TradingPress Information Bureau
  
  
  

  
  
  

4. Higher 40% GST on Luxury & Sin Goods

• Applied to luxury items including mid-size/big cars (over 1500 cc or 4000 mm in length), SUVs, MUVs, taxis, etc.Press Information BureauReuters

• Also covers tobacco, cigarettes, lotteries, casinos, betting, IPL admissions, high-value gaming.Upstox - Online Stock and Share TradingReuters+1

5. Exemptions (0% GST)

• Life-saving & cancer drugs, medicines for rare diseases.Hindustan Times

• Education supplies: maps, globes, pencils, notebooks, crayons, etc.Hindustan Times

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Why the Change?

This overhaul is designed to:

• Simplify the GST framework and ease compliance.The Times of IndiaThe Economic Times

• Stimulate consumer demand ahead of the festive season.Reuters+1

• Reduce inflation and provide relief to the common man.ReutersIndiatimesAl Jazeera

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At-a-Glance Summary

GST Slab	Applicable Items/Services
0% (Exempt)	Health & life insurance, essential medicines, education materials
5%	Daily essentials, dairy products, bicycles, beauty & fitness services
18%	Electronics, small vehicles, cement, motorcycles ≤350 cc
40%	Luxury and sin goods—high-end vehicles, tobacco, gaming, lotteries, etc.

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When Does This Take Effect?

All changes are effective from 22 September 2025, aligning with the festival of Navratri.The Economic TimesReutersThe Times of IndiaJagranjosh.com