Sep 04, 2025 | NewDelhi

The GST Council has approved a major restructuring of India’s tax system, reducing the current four slabs (5%, 12%, 18%, and 28%) to just two rates: 5% and 18%. A special 40% slab has been introduced for luxury and sin goods such as high-end cars, tobacco, and aerated beverages. The revised rates will be effective from September 22, just before Navratri.

What Gets Cheaper?

Food & Beverages: Chapatis, paranthas, paneer, milk, khakra, butter, ghee, nuts, jams, confectionery, biscuits, cereals, fruit juices, ice cream – tax cut to 5% or nil.

Household Items: Toothpaste, toothbrushes, shampoos, soaps, feeding bottles, kitchenware, bicycles, umbrellas – GST reduced to 5%.

Appliances: ACs, dishwashers, TVs – down to 18% from 28%.

Stationery: Notebooks, maps, pencils, crayons, erasers – now nil GST.

Footwear & Textiles: Reduced to 5% from 12%.

Healthcare: Life-saving drugs, diagnostic kits, oxygen, thermometers – GST slashed to 5% or nil.

Insurance: Life & health insurance policies exempt from GST.

Travel & Hospitality: Economy air tickets at 5%; hotel rooms below ₹7,500 taxed at 5%.

Vehicles: Motorcycles up to 350cc and small hybrids down to 18%; EVs remain at 5%.

Construction: Cement cut from 28% to 18%.

Agriculture: Tractors, pumps, sprinklers, fertilisers, biopesticides – GST reduced to 5%.

Fitness & Beauty Services: Salons, gyms, spas, yoga – cut from 18% to 5%.

What Gets Costlier?

Aerated & Caffeinated Drinks: Soft drinks, energy beverages, sugary drinks – taxed at 40%.

Luxury Vehicles: Cars above 1,200cc, motorcycles above 350cc, yachts, aircraft for personal use – 40%.

Tobacco: Cigarettes, gutkha, chewing tobacco – eventually moved to 40% slab (plus cess until Covid-era loans are cleared).

Leisure & Gaming: Casinos, online gaming, horse racing, race clubs, IPL tickets – 40%.

The overhaul is aimed at simplifying compliance, boosting domestic consumption, and providing relief to households and businesses while maintaining higher levies on luxury and sin goods.