The Goods and Services Tax (GST) rates in India are central to every business and household. The 56th GST Council Meeting, held on September 3, 2025, introduced GST 2.0, a major reform that simplifies the tax structure to just three slabs – 5%, 18%, and 40%.
These new rates took effect from September 22, 2025, marking India’s biggest GST overhaul since its launch in 2017.

Key Highlights

1. New simplified GST slabs:

   • 5% (Merit Rate): For essential and priority goods/services.

   • 18% (Standard Rate): Applies to most goods and services.

   • 40% (Demerit Rate): For luxury and sin goods.

2. Exemptions:

   • Health and life insurance are now GST-free.

   • 33 life-saving drugs, educational supplies, and dairy products now attract Nil GST.

3. Reductions:

   • Daily essentials, agriculture goods, and healthcare equipment lowered to 5%.

   • Electronics and small vehicles (≤350cc) lowered to 18%.

4. Increases:

   • Sin goods like pan masala, aerated drinks, and caffeinated beverages raised to 40%.

5. Effective Date:

   • All changes apply from 22nd September 2025, except tobacco-related products, which will take effect later.

Revised GST Rate Structure (Effective September 22, 2025)

1. GST Rate Reductions

2. GST Rate Hikes

Simplified GST Rate Structure (GST 2.0)

After rationalization, GST 2.0 now includes:

• 5%: Essentials and priority goods/services

• 18%: Standard rate for most items

• 40%: Sin and luxury goods

Other niche rates remain:

• 0% / Nil: Exempt goods

• 3% / 0.25%: Precious metals, gems

• 1.5%–6%: Composition scheme

• 2% TDS and 0.5% TCS under GST rules

• Cess: Still applies to tobacco, aerated drinks, vehicles (1%–204%)

Item-Wise GST Lists

A. Nil Rated (0%) Items

• Education: Erasers, maps, notebooks, pencils

• Food: Milk, paneer, chapathi, paratha

• Health: Life-saving drugs (Agalsidase Beta, Imiglucerase, Eptacog Alfa)

• Insurance: All individual life and health policies

• Others: Technical defense imports, handmade paper

B. 5% GST Items

• Agriculture: Tractors, irrigation systems, pesticides

• Essentials: Toiletries, baby care, sewing items, utensils

• Healthcare: Medical gases, diagnostic kits, medicines, thermometers

• Food: Dairy, dried fruits, snacks, bottled water, diabetic foods

• Handicrafts: Idols, wooden crafts, handmade art

• Education: Geometry boxes, notebooks

• Services: Hotel stay ≤₹7,500, movie tickets ≤₹100

• Energy: Solar devices, windmills, fuel cell vehicles

C. 18% GST Items

• Construction: Cement, composite contracts

• Coal & Mining: Coal, lignite, peat

• Electronics: TVs, ACs, dishwashers, monitors

• Textiles: Apparel above ₹2,500, premium quilts

• Automobiles: Standard cars, motorbikes, hybrid vehicles

• Services: Passenger transport, GTA services, professional services

D. 40% GST Items

• Luxury Goods: Cars, bikes >350cc, yachts, aircraft

• Sin Goods: Pan masala, tobacco, caffeinated drinks, carbonated beverages

• Entertainment: Casinos, race clubs, online betting

• Weapons: Revolvers, pistols, smoking pipes

Note: 40% GST on tobacco and related items will apply later through a separate notification.

Summary

The GST 2.0 reforms simplify compliance, promote transparency, and encourage consumption.
Key benefits include:

• Fewer tax slabs (from 4 to 3)

• Broader exemptions for essentials

• Higher rates only on luxury/sin items

• Simplified rate structure for businesses and consumers

Quick Reference: GST Slabs 2025

Keeping track of GST rate revisions is crucial for every business owner, tax consultant, and consumer. The 2025 updates aim to promote ease of doing business and align taxation with India’s growth priorities.

Bookmark this page to stay updated as the GST Council announces further rate revisions through the year.

🔗 References
• New GST Rates for Wellness & Beauty in 2025