In a landmark reform, the Goods and Services Tax (GST) Council on Wednesday approved a sweeping rationalisation of indirect tax rates, cutting levies across a wide range of goods and services. The move, aimed at boosting consumption ahead of the festive season, will come into effect from September 22, 2025, coinciding with the start of Navratri.
Finance Minister Nirmala Sitharaman announced that the existing four-rate structure of 5%, 12%, 18%, and 28% will be replaced with just two principal slabs — 5% and 18%, along with a 40% rate on luxury and sin goods. Essential items and select services have also been brought under the 0% GST category.
The rationalisation makes GST simpler, fairer, and more consumption-friendly, Sitharaman said after chairing the 56th Council meeting. She added that the government’s focus was to balance revenue needs with affordability for consumers.
Key Changes
- 0% GST: Life and health insurance premiums, UHT milk, paneer, Indian breads, and life-saving drugs for cancer and rare diseases.
- 5% GST: FMCG essentials such as hair oil, toothpaste, shampoos, soaps, namkeens, chocolates, feeding bottles, baby diapers, tractors, and select medical kits.
- 18% GST: Consumer durables including air-conditioners, televisions, dishwashers, small cars, two-wheelers, commercial vehicles, and auto parts.
- 40% GST: Cigarettes, carbonated drinks, and luxury automobiles with engine capacity above 1,500cc. GST RATES
| Daily Essentials | ||
| Items | From | To |
| Hari Oil, Shampoo, Toothpaste, Toilet Soap Bar, Tooth Brushes, Shaving Cream | 18% | 5% |
| Butter, Ghee, Cheese & Dairy Spreads | 12% | 5% |
| Pre-packaged Namkeens, Bhujia & Mixtures | 12% | 5% |
| Utensils | 12% | 5% |
| Feeding Bottles, Napkins for Babies & Clinical Diapers | 12% | 5% |
| Healthcare Sector | ||
| Items | From | To |
| Individual Health & Life Insurance | 18% | 0% |
| Thermometer | 18% | 5% |
| Medical Grade Oxygen | 12% | 5% |
| All Diagnostic Kits & Reagents | 12% | 5% |
| Glucometer & Test Strips | 12% | 5% |
| Corrective Spectacles | 12% | 5% |
| Uplifting Farmers & Agriculture | ||
| Items | From | To |
| Tractor Tyres & Parts | 18% | 5% |
| Tractors | 12% | 5% |
| Specified Bio-Pesticides, Micro-Nutrients | 12% | 5% |
| Drip Irrigation Systems & Sprinklers | 12% | 5% |
| Agricultural, Horticultural & Forestry Machines (Soil Preparation, Cultivation, Harvesting, Threshing) | 12% | 5% |
| Affordable Education | ||
| Items | From | To |
| Maps, Charts & Globes | 12% | 0% |
| Pencils, Sharpeners, Crayons & Pastels | 12% | 0% |
| Exercise Books & Notebooks | 12% | 0% |
| Erasers | 5% | 0% |
| Automobiles Made Affordable | ||
| Items | From | To |
| Petrol & Petrol Hybrid, LPG, CNG Cars (≤ 1200cc & 4000mm) | 28% | 18% |
| Diesel & Diesel Hybrid Cars (≤ 1500cc & 4000mm) | 28% | 18% |
| 3-Wheeled Vehicles | 28% | 18% |
| Motorcycles (≤ 350cc) | 28% | 18% |
| Motor Vehicles for Transport of Goods | 28% | 18% |
| Electronic Appliances | ||
| Items | From | To |
| Air Conditioners | 28% | 18% |
| Television (above 32”, including LED & LCD) | 28% | 18% |
| Monitors & Projectors | 28% | 18% |
| Dishwashing Machines | 28% | 18% |
| 40% GST RATE | |
| Category | Itmes |
| Tobacco Products | Cigarettes, cigars, chewing tobacco, gutkha, pan masala |
| Luxury Vehicles | High-end SUVs, premium cars with large engine capacity |
| Sin Goods | Aerated beverages containing nicotine or tobacco |
| Other Luxury Items | Certain high-end goods notified by the GST Council |
| Motorcycles >350cc | Motorcycles above 350cc |