Sep 3, 2025| Prime Minister Narendra Modi welcomed the move, terming it a reform that will ease life for people, particularly farmers, MSMEs, small businesspersons, and the middle class, and also robust the economy.

The PM Narendra Modi states that , these GST reforms will not only improve the lives of citizens but also make it easier and enhance the doing of business, especially the small traders and enterprises.

The new tax rates would come into force from September 22, the onset of Navaratri.

What becomes cheaper

The GST Council has sanctioned a two-rate structure of 5% and 18%. The decision came following a long day-long GST Council meeting in Delhi.
Finance Minister Nirmala Sitharaman said all decisions were made by consensus and no state had any objection.

Reforms have been conducted with the common man in mind. The entire tax on common man's daily use commodities has been analyzed, and in most cases, the rates have come down drastically, she said.

West Bengal minister, Chandrima Bhattacharya, accused the new GST, to come into force from September 22, of leading to an estimated loss of 477 billion rupees.

The GST reduction has been excluded by the committee from the current four slabs – 5, 12, 18, and 28 per cent to a two-rate regime – 5 and 18 per cent. The committee is also recommending a separate 40 per cent slab for a limited category of goods such as luxury cars, tobacco, and cigarettes.
The following is the complete list of goods that have been given a rate reduction:

GST Rates: 0%/Nil

33 Medicines used for lifesaving drugs, Cancer medicines, Medicines for life-threatening ailments
3 life-saving drugs are used for treating cancer, rare diseases, and other life-threatening chronic diseases.
Individual medical insurance, Medical insurance
Pencils, sharpeners, crayons, pastes, maps, charts, globes, notebooks, exercise books, and erasers
Ultra-High Temperature (UHT) milk, Chena or paneer, packaged and labeled, Pizza bread, Khakhra, Chapathi or Roti

GST Rates: Goods - From 5% to Nil

Hair oil, Shampoo, Toothpaste, Toilet soap, Tooth brush, Shaving cream
Butter, Ghee, Cheese & dairy spreads, Namkeens, Utensils
Infant feeding bottles, baby napkins, and clinical diapers
Sewing machine and accessories
Thermometer, Medical-grade oxygen, All diagnostic kits and reagents, Glucometer and test strip
Corrective glasses
Tractor tyres, accessories, tractors
Specified bio-pesticides, Micro-Nutrients
Drip irrigation system and sprinklers
Machines used in agriculture, horticulture, or forestry for ground preparation

GST rates: Goods-18%

Petrol & Petrol Hybrid, LPG, CNG Vehicles (up to 1200 cc & 4000 mm)
Diesel & Diesel Hybrid Vehicles (not over 1500 cc & 4000 mm)
3 Wheeled Vehicles
Motorcycles (350 cc & lower)
Motor Vehicles for the transport of goods
Air Conditioners
Televisions (32″ and higher) including LED & LCD Televisions
Monitors & Projectors
Dish Washing Machines
Road tractors with engine size above 1800 cc

GST rates: Goods - 40%

Pan masala, Cigarettes, Gutka, Chewing Tobacco
Aerated waters with sugar or flavour added, Caffeinated drinks, Non-alcoholic drinks
Smoking pipes
Motorbikes exceeding 350 cc
Cars as personal vehicles
Yachts
Revolvers & pistols
Gambling, casinos, lottery, horse racing, and money gaming online

For the full list of items, click here.

Frequently asked questions

Q1. From when will the GST rate changes be effective?
Ans. According to the suggestions of the GST Council in its 56th meeting, the GST rate changes on services and other goods except cigarettes, chewing tobacco products such as zarda, and unmanufactured Tobacco and beedi will be applicable from 22nd September, 2025.

Q2. Why Government reduce the GST rate on medical devices? Will it not cause an inverted duty structure?
Ans. The measure aims to reduce the cost of healthcare and thus benefit the patients, especially the poor.
The measure does not introduce any new inverted duty structure since the existing structure has have inverted duty structure, although this will enhance the inversion.

Q4. What is the revised GST rate on small petrol, LPG, CNG, or diesel cars is what? What is included in small cars?
Ans. All small cars GST rate has come down from 28% to 18%. For GST purposes, Small cars refer to Petrol, LPG, or CNG vehicles with an engine capacity not exceeding 1200 cc and a length up to 4000 mm, and Diesel vehicles with an engine capacity not exceeding 1500 cc and a length up to 4000 mm.

Q5. Why refund of the inverted duty structure on copy zari produced from metallised plastic film limited, while there is no other limit on refund on other textile products produced from plastic or rubber?
Ans. The decision to restrict ITC on the plastic/ polyester film in imitation zari was taken in the 52nd Council meeting. The focus of this GST rate rationalisation exercise has been to streamline GST rates.

Q 6. What is the new GST rate on a toilet soap bar? Why has a distinction been kept between liquid soap and soap in bars?
Ans. The GST rate on a toilet soap bar is 5% now. This is aimed at reducing the monthly spending of the lower middle class and the poor.

Q7.Will the hotel accommodation services, wherein the value of supply is Rs 7500 per unit per day or equivalent, be taxed at 18%?
Ans.No, the above service will be covered by a GST rate of 5% without ITC.

Q8. What is the rate of GST recommended on beauty and physical well-being services? What all will fall under this rate?
Ans. Beauty and physical well-being services, such as services of health clubs, salons, barbers, fitness centers, yoga, etc., will be subject to GST at the rate of 5% without ITC. These services were subject to 18% GST previously.

Q9. Are lottery tickets, betting, gambling, horse racing, and casinos liable to GST at the rate of 40%?
Ans. Yes, for all the notified actionable claims such as betting, casinos, gambling, horse racing, lottery, and money games on the internet, the GST rate of 40% shall be applicable.

Q10.What would be the GST rate on residuary job work services?
Ans. Residuary job-work services, i.e., those job-work services in respect of which a specific rate is not notified, are presently attracting GST at a 12% rate. Such services will now attract GST at the rate of 18%.

Q11.My outward supply is exempted under the new rate schedule. But I have already got the ITC of GST paid in my books. Do I have to reverse ITC?
Ans. The ITC can be used to pay outward liability for supplies of the goods/services or both made up to 21st September, 2025. However, for supplies made on or after i.e 22nd September 2025, when the rate change becomes effective, ITC will need to be reversed according to the provisions of the CGST Act, 2017.