GST Council Simplifies Tax Structure - New Slabs from September 22, 2025
The GST Council has announced a major overhaul of tax rates effective September 22, 2025, reducing the earlier four-tier system to two primary slabs (5% and 18%), while introducing a 40% slab for luxury and sin goods.
Key Highlights
0% GST (Exempted Items):
Stationery: Exercise books, notebooks, erasers, pencils, sharpeners, crayons, pastels, maps, charts, globes.
Essentials: Ultra-High Temperature (UHT) milk.
Healthcare: 33 life-saving drugs.
5% GST (Daily Use & Essentials):
Food: Condensed milk, butter, ghee, cheese, dry fruits (almonds, pistachios, dates, figs, dried mangoes, citrus fruits).
Processed food: Pasta, noodles, cornflakes, pastry, cakes.
Healthcare: Thermometers, oxygen, diagnostic kits, glucometers, test strips.
Personal care: Face powder, hair oil, shampoo, toothpaste, tooth powder, shaving cream.
18% GST (Mid-Range Goods & Vehicles):
Automobiles: Petrol & hybrid cars (up to 1200 cc), diesel & hybrid cars (up to 1500 cc), three-wheelers, motorcycles up to 350 cc, goods transport vehicles.
Electronics: Air conditioners, TVs above 32 inches, monitors, projectors (down from 28%).
40% GST (Luxury & Sin Goods):
Tobacco products: Cigarettes, cigars, chewing tobacco, vapes.
Beverages: Pan masala, aerated and carbonated fruit beverages.
Luxury vehicles: Petrol cars above 1200 cc, diesel cars above 1500 cc, motorcycles above 350 cc.
High-end assets: Yachts, private vessels, personal aircraft.
Impact
With this restructuring, daily essentials and healthcare items become more affordable, while luxury consumption faces higher taxation. The move is expected to simplify compliance while aligning taxes with affordability and usage.
