The Goods and Services Tax (GST) Council has rolled out one of the biggest tax reforms since its inception, which will come into effect from September 22, 2025, the first day of Navratri. This new system, popularly known as GST 2.0, simplifies the structure and aims to reduce the tax burden on households, while keeping taxes high on luxury and sin goods.
Simplified GST Structure 2025
The earlier slabs of 5%, 12%, 18% and 28% have been restructured into four clear bands:
- 0% on essential goods including medicines, food items and educational materials
- 5% on household goods, personal care and processed foods
- New standard rate 18% on most appliances, vehicles and services
- 40% on luxury and harmful products such as tobacco, aerated drinks, high-end vehicles and yachts
Category-Wise GST Rate List 2025
0% GST (Nil Rate)
- Food & Staples:
- UHT milk
- Pre-packaged and labelled chhena (paneer)
- Roti/chapati, khakhra, pizza bread
- Education Supplies:
- Maps, charts, globes
- Pencils, erasers, sharpeners
- Notebooks, exercise books, crayons
- Healthcare:
- 33 essential life-saving drugs
- High-cost cancer and rare disease medicines
- Individual life and health insurance premiums
5% GST
- Food & Agro Products:
- Live horses (down from 12%)
- Condensed milk, butter, ghee, cheese, dairy spreads (12% → 5%)
- Dried Brazil nuts (12% → 5%)
- Vegetable extracts, starches, malt, agar
- Household & Personal Care:
- Soaps, shampoos, toothpaste, toothbrushes
- Hair oil, shaving cream
- Feeding bottles, baby napkins, clinical diapers
- Utensils, tableware, kitchenware
- Sewing machines and parts
- Medical Devices & Items:
- Thermometers
- Oxygen
- Diagnostic kits, glucometers, test strips
- Corrective spectacles
18% GST
- Electronics & Appliances:
- Air conditioners
- Refrigerators, washing machines, dishwashers
- LED/LCD TVs above 32 inches
- Monitors, projectors
- Automobiles & Mobility:
- Motorcycles up to 350 cc
- Scooters
- Small petrol/CNG/LPG cars (≤1200cc and ≤4m length)
- Small diesel cars (≤1500cc and ≤4m length)
- Three-wheelers
- Auto parts
- Bicycles
- Other Services:
- General insurance products (except life & health, which are nil)
40% GST
- Luxury & Sin Goods:
- Motorcycles above 350 cc
- High-end luxury cars, SUVs
- Yachts, private aircraft
- Tobacco products, pan masala
- Aerated/sugary drinks
- Betting, casinos, online gaming
Impact of GST 2.0
The new GST system is expected to reduce household expenses, lower education costs, and make healthcare more affordable. Lower GST rates are also expected to boost demand in sectors like automobiles and electronics. On the other hand, the new 40% tax bracket will make luxury and harmful goods more expensive. Overall, this will be a positive decision for the public.
Single-Page Summary Table: Old vs New GST Rates
| Item / Category | Old GST Rate | New GST Rate |
|---|---|---|
| UHT Milk | 5% | 0% |
| Paneer (pre-packaged & labelled) | 5% | 0% |
| Roti/Chapati, Khakhra, Pizza Bread | 5% | 0% |
| Maps, Charts, Globes | 12% | 0% |
| Pencils, Erasers, Crayons | 12% | 0% |
| Notebooks, Exercise Books | 12% | 0% |
| Life-saving Medicines (33 items) | 5%–12% | 0% |
| Cancer & Rare Disease Drugs | 5%–12% | 0% |
| Health & Life Insurance Premiums | 18% | 0% |
| Live Horses | 12% | 5% |
| Condensed Milk, Butter, Cheese | 12% | 5% |
| Dried Brazil Nuts | 12% | 5% |
| Vegetable Extracts, Malt, Starch | 12%–18% | 5% |
| Soaps, Shampoos, Toothpaste | 18% | 5% |
| Toothbrushes, Hair Oil | 18% | 5% |
| Feeding Bottles, Baby Napkins | 12%–18% | 5% |
| Utensils, Tableware, Kitchenware | 12%–18% | 5% |
| Sewing Machines & Parts | 12% | 5% |
| Thermometers, Oxygen | 12%–18% | 5% |
| Diagnostic Kits, Glucometers | 12%–18% | 5% |
| Corrective Spectacles | 12% | 5% |
| Air Conditioners | 28% | 18% |
| Refrigerators, Washing Machines | 28% | 18% |
| LED/LCD TVs (>32 inches) | 28% | 18% |
| Monitors, Projectors | 28% | 18% |
| Motorcycles ≤350 cc | 28% | 18% |
| Scooters, Three-wheelers | 28% | 18% |
| Small Cars (Petrol ≤1200cc) | 28% | 18% |
| Small Cars (Diesel ≤1500cc) | 28% | 18% |
| Auto Parts, Bicycles | 28% | 18% |
| General Insurance | 18% | 18% |
| Motorcycles >350 cc | 28% | 40% |
| Luxury Cars, SUVs | 28% | 40% |
| Yachts, Private Aircraft | 28% | 40% |
| Tobacco, Pan Masala | 28% | 40% |
| Aerated / Sugary Drinks | 28% | 40% |
| Betting, Casinos, Online Gaming | 28% | 40% |
Conclusion
From September 22, 2025, the new GST rates will re-price many categories of goods. This will make essential items more affordable for average households, while taxes on luxury goods will remain high as before. This new system is being seen as a welcome gift for consumers during the festive season, and the increased demand could also boost economic growth.
Leave a Reply