GST New Rates 2025: What Becomes Cheaper and What Gets Costlier From September 22

The GST Council’s September 2025 revamp slashes rates on essentials like food, insurance, and household items to 0% and 5%, while luxury cars, tobacco, and sin goods now fall under a 40% slab. Check the full list of what’s cheaper and what’s costlier.

GST New Rates 2025: GST Slabs at a Glance (Effective September 22, 2025)

GST Slab	Items Covered
0% (Nil Tax)	Chapati, paratha, paneer, Indian breads, individual life & health insurance
5%	Butter, ghee, dry nuts, jam, biscuits, ice cream, corn flakes, cereals, sausages, juices, 20L bottled water, shampoo, soap, toothpaste, hair oil, talcum powder, feeding bottles, kitchenware, bicycles, umbrellas, bamboo furniture
18%	Cement, small cars (≤1,200cc petrol/≤1,500cc diesel), air-conditioners, dishwashers, TVs, motorcycles ≤350cc
40% (Luxury & Sin Goods)	Cars >1,200cc (petrol)/>1,500cc (diesel) & length >4,000 mm, motorcycles >350cc, yachts, private aircraft, racing cars, premium automobiles, tobacco & cigarettes, luxury items

GST New Rates 2025: What’s Cheaper, What’s Costlier

Finance Minister Nirmala Sitharaman on Wednesday announced sweeping changes to the Goods and Services Tax (GST), effective September 22, 2025 – the first day of Navratri.

The GST revamp simplifies tax rates by pushing most items into the 5% and 18% slabs, making essentials more affordable while placing luxury and sin goods under a 40% tax slab.

This reform comes as welcome news for the common man and middle class, with household items, food products, and personal care goods becoming significantly cheaper.

GST New Rates 2025: What Gets Cheaper

Essential Food Items (0% Tax)

• All varieties of chapati and paratha (reduced from 5%)
  
• Paneer, Indian breads, and other basic food staples

Everyday Food & Beverages (Reduced to 5% from 18%)

• Butter, ghee, dry nuts, condensed milk.
  
• Sausages, meat, sugar confectionery.
  
• Jam, jellies, tender coconut water.
  
• Namkeen, 20-litre bottled drinking water.
  
• Fruit pulp, juices, milk-based beverages.
  
• Ice cream, pastries, biscuits, corn flakes, cereals, sugar sweets.

Household Items (Reduced to 5% from 12%)

• Tooth powder, feeding bottles.
  
• Tableware, kitchenware, utensils.
  
• Umbrellas, bicycles, bamboo furniture, combs.

Personal Care (Reduced to 5% from 18%)

• Shampoo, soap, hair oil.
  
• Toothpaste, toothbrushes.
  
• Talcum powder, face powder.

Insurance

• Individual life and health insurance policies will now be tax-free, encouraging wider adoption.

Construction & Vehicles

• Cement: Reduced from 28% to 18%.
  
• Small vehicles:
  • Petrol, LPG, CNG cars ≤1,200 cc & ≤4,000 mm length.
    
  • Diesel cars ≤1,500 cc & ≤4,000 mm length.
    
    • Tax reduced to 18%.

Consumer Durables (Reduced to 18% from 28%)

• Air conditioners
  
• Dishwashers
  
• Televisions
  
• Motorcycles up to 350 cc

Electric Vehicles

• Retain existing 5% GST rate.

GST New Rates 2025: What Gets Costlier

Automobiles (40% Tax)

• Cars above 1,200 cc (petrol) and 1,500 cc (diesel) with length >4,000 mm
  
• Motorcycles above 350 cc
  
• Personal yachts and aircraft
  
• Racing cars
  

Luxury & Harmful Goods (40% Tax)

• Premium automobiles
  
• Tobacco and cigarettes
  
• Select luxury products

Note: Tobacco, Gutkha, and related products will continue under the existing 28% tax + compensation cess until loans taken for state revenue loss compensation are fully repaid.

GST New Rates 2025: Effective Date

• The revised GST rates will take effect from September 22, 2025, except for Gutkha, Tobacco, and related products, which will temporarily retain the older tax structure.

GST New Rates 2025 – Wrapping Up

• This GST adjustment brings tangible relief to households with cheaper food items, daily essentials, and personal care products. At the same time, it raises levies on luxury and sin goods to maintain fiscal balance.

• With Navratri marking the rollout, the reform is poised to give festive shoppers and the middle class plenty of reasons to celebrate.

GST New Rates 2025: Why You Should Register Now

• With the GST New Rates 2025 coming into effect from September 22, essentials like food, insurance, and daily-use products are now cheaper at 0% or 5% GST, while luxury cars, tobacco, and high-end goods fall under the 40% slab.

• If you are running a business and haven’t registered for GST yet, this is the right time. GST registration ensures legal compliance, allows you to claim input tax credit, and builds trust with customers. The new rate structure makes it even more important for small and medium businesses to be part of the GST system.

Official GST Portal to Register

Click Here

GST New Rates 2025 – FAQ

Also Read

Documents Required for GST Registration in 2025 – Complete Checklist