New GST Rates: Full List of Items That Have Received Rate Cuts

In a significant move to simplify India’s tax structure and provide relief to consumers, the GST Council, chaired by Union Finance Minister Nirmala Sitharaman, has approved a streamlined two-tier GST rate structure of 5% and 18%, effective from September 22, 2025. This reform, announced after a marathon meeting in Delhi, eliminates the previous four-slab system (5%, 12%, 18%, and 28%) and introduces a special 40% slab for select luxury and sin goods. The decision, hailed as a “Diwali gift” by Prime Minister Narendra Modi, is expected to reduce the tax burden on daily essentials and stimulate economic activity, despite an estimated revenue loss of ₹477 billion.

Key Highlights of the GST Reforms

• Two-Tier Structure: The new GST system consolidates rates to 5% and 18%, with most items previously under 12% moving to 5% and 90% of items under 28% shifting to 18%.

  
  

• Zero-Rated Essentials: Critical items like life-saving drugs, cancer medicines, and individual health and life insurance premiums are now exempt from GST (0% slab).

  
  

• Special 40% Slab: Luxury goods and sin products, such as high-end cars, tobacco, cigarettes, pan masala, and motorcycles exceeding 350cc, will attract a 40% GST rate.

  
  

• Implementation Date: The new rates will take effect on September 22, 2025, aligning with the start of Navratri, boosting festive season consumption.

  
  

Items That Will Get Cheaper

The GST rate cuts focus on making daily essentials and critical goods more affordable for the common man. Below is a comprehensive list of items now taxed at lower rates:

Items Under 0% GST (Exempt)

• Healthcare: Life-saving drugs, cancer medicines, medications for rare diseases, individual life and health insurance policies.

• Education: Maps, charts, globes, pencils, sharpeners, crayons, pastels, exercise books, notebooks, erasers.

• Food: Ultra-High Temperature (UHT) milk, chena or paneer (pre-packaged and labelled), pizza bread, khakhra, chapathi, or roti.

Items with GST Reduced to 5% (from 12% or 18%):

• Personal Care: Hair oil, shampoo, toothpaste, toilet soap, toothbrush, shaving cream.

• Food and Dairy: Butter, ghee, cheese, dairy spreads, namkeens, pre-packaged and labelled fortified rice kernels.

• Household: Utensils, sewing machines and parts, feeding bottles, napkins for babies, clinical diapers.

• Healthcare: Thermometers, medical-grade oxygen, all diagnostic kits and reagents, glucometers and test strips, corrective spectacles.

• Agriculture: Tractor tyres and parts, tractors, specified bio-pesticides, micro-nutrients, drip irrigation systems, sprinklers, agricultural/horticultural/forestry machines for soil preparation.

  
  

Items with GST Reduced to 18% (from 28%):

• Automobiles: Petrol, LPG, CNG, and petrol-hybrid cars (not exceeding 1200cc and 4000mm), diesel and diesel-hybrid cars (not exceeding 1500cc and 4000mm), three-wheeled vehicles, motorcycles up to 350cc, ambulances.

• Electronics and Appliances: Certain televisions, refrigerators, air conditioners, washing machines.

• Food: Pasta, chocolates.

• Construction: Cement

  
  

Items with GST Increased to 40% (from 28%):

A select group of luxury and sin goods will face a new 40% GST slab, including:

• High-end cars (exceeding specified engine and length limits).

• Tobacco, cigarettes, pan masala, gutka, chewing tobacco.

• Caffeinated beverages and non-alcoholic drinks.

• Motorcycles exceeding 350cc.

Additional Notes:

• GST slabs simplified to two main rates: 5% (Merit) and 18% (Standard), with a special 40% rate for select luxury/sin goods.

• Changes aim to reduce costs for essentials, support agriculture, healthcare, and housing, while increasing taxes on luxury and harmful products.

• Estimated revenue loss: ₹477 billion due to rate cuts.

Economic and Consumer Impact

The GST reforms are designed to benefit the common man, farmers, MSMEs, and the middle class by lowering the cost of daily-use items. Industry leaders, including Mukesh Ambani of Reliance Industries, have praised the move as a “progressive step towards affordability,” promising to pass on the benefits to consumers. The Confederation of Indian Industry (CII) noted that the simplified structure will ease compliance, reduce litigation, and provide predictability for businesses.

However, the revenue loss of ₹48,000 crore has raised concerns among some opposition-governed states. Finance Minister Sitharaman countered that increased consumption and improved compliance will offset the fiscal impact, fostering economic growth. Analysts at Citi Research suggest that sectors like automotive (e.g., Maruti Suzuki, Hero MotoCorp), consumer goods, and construction (cement, appliances) will see significant benefits.

Looking Ahead

The GST Council’s decision marks the boldest tax reform since the introduction of GST in 2017. With the festive season approaching, the rate cuts are expected to boost consumer spending and drive demand. The 8Bit Market Research Team will continue to monitor the implementation of these changes and their impact on businesses and consumers.

For more details, refer to the official announcement by the GST Council.

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