NEW GST RATES 2025: Goods and Services Tax (GST) structure.
The 56th GST Council meeting has ushered in a significant overhaul of India's Goods and Services Tax (GST) structure. Effective September 22, 2025, the new regime aims to simplify the tax system, focusing on providing relief to the common man, farmers, and key economic sectors. The complex multi-tier system has been largely streamlined into a two-rate structure with a special demerit category.
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| New GST Rates and Slabs |
Key Highlights of the New GST Structure
Focus on Simplification: The new system primarily revolves around a Standard Rate of 18% and a Merit Rate of 5%.
Relief for Essentials: Many daily-use items have been moved to the 0% or 5% slab, reducing the cost of living.
Boost for Economy: Sectors like agriculture, automobiles, and renewable energy see reduced rates.
Demerit Goods Taxed Higher: Sin goods and luxury items now fall under a special 40% rate to discourage consumption.
The following sections provide a detailed, category-wise breakdown of all the major changes.
Detailed Breakdown of New GST Rates on Goods
1. Goods Attracting 0% GST (Nil Rate)
Several essential food items and stationery products have been made completely tax-free.
Product Description | Previous GST Rate | New GST Rate |
Ultra-High Temperature (UHT) Milk | 5% | 0% |
Chena or Paneer (Pre-packaged & labelled) | 5% | 0% |
Pizza Bread | 5% | 0% |
Khakhra, Chapati, or Roti | 5% | 0% |
Paratha, Parotta, and other Indian Breads | 18% | 0% |
Erasers | 5% | 0% |
Uncoated Paper for Exercise Books | 12% | 0% |
Exercise Books, Graph Books, Laboratory Notebooks | 12% | 0% |
Maps, Charts, Atlases, Globes | 12% | 0% |
Pencil Sharpeners | 12% | 0% |
Pencils, Crayons, Drawing Charcoals | 12% | 0% |
2. Goods Attracting 5% GST (Merit Rate)
This category includes a wide range of common food items, personal care products, and items supporting agriculture and green energy.
Product Description | Previous GST Rate | New GST Rate |
Butter, Ghee, Dairy Spreads | 12% | 5% |
Cheese | 12% | 5% |
Pasta, Noodles | 12% | 5% |
Fruit Juices | 12% | 5% |
Sauces, Ketchup, Dressings | 12% | 5% |
Ice Cream | 18% | 5% |
Chocolates, Cocoa Products | 18% | 5% |
Corn Flakes, Cereal Preparations | 18% | 5% |
Hair Oil, Shampoo | 18% | 5% |
Toothpaste, Dental Floss | 18% | 5% |
Toilet Soap | 18% | 5% |
Tractors | 12% | 5% |
Agricultural Machinery | 12% | 5% |
Bicycles and Parts | 12% | 5% |
Footwear (Value ≤ ₹2500 per pair) | 12% | 5% |
Solar Water Heaters, Solar Cookers | 12% | 5% |
3. Goods Attracting 18% GST (Standard Rate)
Many high-consumption durable goods and vehicles have been shifted from the 28% slab to the new standard rate of 18%.
Product Description | Previous GST Rate | New GST Rate |
Air Conditioners | 28% | 18% |
Televisions (all sizes) | 28% | 18% |
Dishwashing Machines | 28% | 18% |
Small Cars (Engine ≤ 1200cc petrol/≤1500cc diesel) | 28% | 18% |
Motorcycles (≤ 350cc) | 28% | 18% |
Buses, Trucks, Ambulances | 28% | 18% |
Cement | 28% | 18% |
Footwear (Value > ₹2500 per pair) | 12% | 18% |
Apparel (Value > ₹2500 per piece) | 12% | 18% |
4. Goods Attracting 40% GST (Special De-merit Rate)
Items considered harmful to health or luxury products have been placed in the highest tax bracket.
Product Description | Previous GST Rate | New GST Rate |
Pan Masala | 28% | 40% |
Aerated Beverages | 28% | 40% |
Caffeinated Beverages | 28% | 40% |
Cigarettes, Cigars | 28% | 40% |
Tobacco Products | 28% | 40% |
Luxury Cars (Beyond specified limits) | 28% | 40% |
High-Capacity Motorcycles (>350cc) | 28% | 40% |
Aircraft for Personal Use | 28% | 40% |
Yachts and Pleasure Vessels | 28% | 40% |
Revised GST Rates on Services
The rate rationalization also extends to key services, making insurance more affordable and adjusting rates for hospitality and travel.
Service Description | Previous GST Rate | New GST Rate |
Individual Health Insurance Policies | 18% | 0% |
Individual Life Insurance Policies | 18% | 0% |
Hotel Accommodation (≤ ₹7500 per day) | 12% | 5% |
Beauty and Wellness Services (Gyms, Salons, Yoga) | 18% | 5% |
Air Travel (Other than Economy Class) | 12% | 18% |
Casino, Gambling, Race Club Services | 28% | 40% |
Conclusion
The new GST rates effective from September 2025 represent a major step towards a simpler, more efficient tax system in India. By lowering taxes on essentials and common goods while increasing them on demerit products, the reform aims to balance revenue generation with public welfare and economic growth. Businesses and consumers alike should review these changes carefully to understand their financial impact.
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