The 56th Goods and Services Tax (GST) Council meeting, chaired by Finance Minister Nirmala Sitharaman on Wednesday, approved a landmark overhaul of India’s indirect tax regime. Introduced in 2017 with four tax slabs (5%, 12%, 18% and 28%), GST will now largely operate with just two rates – 5% and 18%.
This comes after Prime Minister Narendra Modi, in his Independence Day address earlier this year, promised “next-level GST reforms” to simplify the system and boost domestic consumption. The reform also aims to cushion India’s economy against global pressures, including US tariffs on Indian exports.
Under the new structure, duties on essential items such as medicines, food products, household goods, vehicles, appliances, insurance, cement and tractors have been slashed significantly. However, luxury cars, yachts, aircraft for personal use, tobacco, and gambling-related services will face higher taxes under a newly introduced 40% slab.
The revised GST rates will take effect from 22 September, 2025.
Items that get cheaper from 22 September, 2025
| Category/Item | Previous Tax Slab | Revised Tax Slab |
|---|---|---|
| Chapati, Parathas | 5% | Nil |
| UHT Milk, Paneer, Khakra | 5% | Nil |
| Butter, Ghee, Dry Nuts, Ice Cream, Pastry, Namkeen, Juices | 18% | 5% |
| Toothpaste, Shampoo, Soap, Hair Oil | 18% | 5% |
| ACs, Dishwashers, TVs | 28% | 18% |
| Maps, Charts, Notebooks, Erasers | 5–12% | Nil |
| Footwear, Textiles | 12% | 5% |
| Life-saving Drugs, Medical Devices | 12–18% | 0–5% |
| Thermometers, Oxygen, Test Kits | 18% | 5% |
| Insurance (Life & Health) | 12% | Nil |
| Economy Flight Tickets | 12% | 5% |
| Cement | 28% | 18% |
| Small Hybrid Cars | 28% | 5% |
| Auto Components | 28% | 18% |
| Agricultural Machinery & Fertilizer Inputs | 12–18% | 5% |
Items that get expensive from 22 September, 2025:
| Category/Item | Previous Tax Slab | Revised Tax Slab |
|---|---|---|
| High-end Cars (>1200 cc, >4000 mm) | 28% | 40% |
| Motorcycles >350 cc | 28% | 40% |
| Yachts, Aircraft for Personal Use | 28% | 40% |
| Tobacco & Tobacco Products | 28% + Cess | 40% (after cess period) |
| Casinos, Gambling, Horse Racing, Online Gaming | 28% | 40% |
| IPL Tickets & Race Club Services | 28% | 40% |
This reform marks the biggest GST revamp since 2017, promising relief on essentials while targeting luxury and sin goods with higher levies.
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