New GST Slabs and Rates List in India: GST Rate Cut 2025

India is seeing its biggest GST rate cut since the tax was launched in 2017. The GST Council has decided to simplify the system by cutting down the four existing slabs to just 5% and 18%, while keeping a special 40% slab for luxury items like high-end cars, tobacco, and aerated drinks.

From September 22, 2025, the new GST rates list will bring relief to households with lower taxes on food, medicines, daily essentials, insurance, small cars, and even cement. On the other hand, luxury goods such as large vehicles, soft drinks, and tobacco products will become more expensive.

This GST rate cut 2025 is part of wider reforms aimed at boosting spending, easing household budgets, and supporting the economy at a time when US tariffs are adding pressure. 

What Gets Cheaper with the GST Rate Cut 2025

Here are the items that will get cheaper with GST reforms: 

• Food & Beverages: Chapati, parathas, paneer, UHT milk, pizza bread, khakra – all now tax-free. Everyday foods like butter, ghee, dry fruits, jam, confectionery, namkeen, ice cream, biscuits, and cornflakes move to 5% from 18%.
• Plant-Based Drinks: Soya milk and plant-based milk drinks are now taxed at 5% instead of 12–18%.
• Household Items: Tooth powder, feeding bottles, tableware, kitchenware, umbrellas, utensils, bicycles, bamboo furniture, combs, shampoo, toothpaste, soap, and hair oil will all be cut to 5% from 12–18%.
• Appliances: ACs, dishwashers, TVs, and consumer electronics shift to 18% from 28%.
• Stationery: Maps, charts, globes, pencils, crayons, notebooks, sharpeners, erasers to 0 GST.
• Textiles & Footwear: Rates reduced to 5% from 12%, lowering costs for everyday clothing and shoes.
• Healthcare: Life-saving drugs, medical devices, oxygen, diagnostic kits, thermometers, glucometers, to 5% or nil.
• Insurance: Individual life and health insurance policies are now tax-free.
• Travel & Hotels: Rooms up to ₹7,500 and economy flights now 5% GST.
• Vehicles: Motorcycles up to 350cc, small hybrids, and auto components will 18% from 28%. EVs continue at 5% GST.
• Construction: Cement falls from 28% to 18%.
• Agriculture: Machinery, pumps, sprinklers, fertilisers, biopesticides, tractor parts to 5% from 12–18%.
• Wellness Services: Salons, gyms, yoga studios, and fitness centres will be taxed at 5% GST instead of 18%.

What Gets Costlier with GST Rate Cut 2025

The items mentioned below will be costlier with the GST revamp:

• Aerated & Caffeinated Drinks: Popular soft drinks, such as Coca-Cola and Pepsi, as well as other carbonated or caffeinated beverages, will have a 40% GST rate instead of the previous 28%.
• Sugary Beverages: All drinks with added sugar or sweeteners, including flavoured waters, will be taxed at 40% (up from 28%).
• Large Automobiles: Cars above 1,200cc (petrol), 1,500cc (diesel), and motorcycles above 350cc, will now fall under the 40% slab.
• Luxury Transport: Yachts, aircraft for personal use, and racing cars will also attract 40% GST.
• Tobacco & Related Products: Cigarettes, gutkha, bidi, chewing tobacco, zarda, and other tobacco products remain under 28% + cess, but will shift to 40% GST once compensation cess ends.
• Leisure & Gaming: Services by race clubs, casinos, horse racing, online gaming, and IPL tickets will be subject to 40% GST.

Conclusion

By reducing the slabs to just 5% and 18%, the government has made food, medicines, small vehicles, appliances, and insurance policies more affordable. At the same time, a 40% higher slab applies to luxury cars, aerated drinks, tobacco, and gaming. This GST revamp is expected to ease household budgets and boost everyday consumption.

Source: NDTV

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