New GST Rates 2025: Complete List of What Gets Cheaper and What Gets Costlier From Sept 22

The GST Council, led by Finance Minister Nirmala Sitharaman, has rolled out new GST rates which will come into effect from September 22nd under the much-awaited GST 2.0 reforms.

The new GST rates have been simplified into two major slabs, 5% and 18%, while introducing a special 40% GST bracket for luxury and sin products. This is definitely a huge relief for the middle-income household because for the common man, this means many daily essentials, groceries, medicines, and personal care items will now become cheaper, while luxury goods, tobacco, and aerated drinks will get costlier.

What Gets Cheaper Under GST 2.0

1. Daily essentials: Good news for households, UHT milk is now tax-free, while condensed milk, butter, paneer, ghee, and cheese have become cheaper with GST dropping from 12% to 5%.

2. Groceries & staples: Everyday food items like malt, starches, pasta, cornflakes, biscuits, chocolates, and cocoa products now attract just 5% GST, down from 12-18%.

3. Personal care products: Mass-market items like hair oil, toothpaste, toothbrushes, shaving cream, and toilet soap are now taxed at 5%, compared to 12-18% earlier.

4. Dry fruits & snacks: Popular items like almonds, cashews, hazelnuts, pistachios, dates, namkeen, bhujia, and savoury snacks will now be available at 5% GST, making festive shopping lighter on the pocket.

5. Baby products: Parents get relief as feeding bottles, baby napkins, and nappies now fall under 5% GST (down from 12%).

6. Oils & animal products: Vegetable oils, animal fats, spreads, sausages, and fish/meat-based products are now taxed at 5%, making cooking and protein-based diets cheaper.

7. Footwear & textiles: Mass-market footwear and textile products have been shifted to 5% GST from 12%, benefitting millions of consumers.

8. Automobiles (small segment): Public transport and smaller vehicles get relief-buses, trucks, ambulances, three-wheelers, and motorcycles up to 350 cc now attract 18% GST, down from 28%. Small cars and electric vehicles (EVs) also continue with lower tax benefits.

9. Life-saving medicines: This is one of the biggest reliefs to the healthcare sector, as 33 life-saving drugs and medicines have been moved from 5% GST to zero tax, ensuring critical treatments become more affordable.

What Gets Costlier Under GST 2.0

1. Luxury and sin goods: Items like pan masala, gutkha, cigarettes, bidis, aerated drinks with added sugar, and carbonated or caffeinated beverages will now face a steep 40% GST, up from 28%.

2. High-end vehicles: Luxury on wheels gets pricier. Motorcycles above 350cc, midsize/large cars, luxury cars, yachts, and personal aircraft now come under the 40% GST bracket.

3. Tobacco products: Taxes on tobacco and pan masala will now be linked to the retail sale price (RSP), pushing up final market costs further.

4. Coal: The GST rate on coal has been hiked, and the exact percentage will be notified soon, which may increase power and energy-related costs.

5. Fancy beverages: Certain non-essential non-alcoholic beverages also move into the higher GST category, making them more expensive for consumers.

Impact of GST 2.0 On the Common Man

The new GST rates, or the GST 2.0 reform, have been brought about to create a balance between making everyday essentials more affordable while discouraging excessive consumption of luxury and harmful products.

"The rationalisation of tax slabs in the GST Council meeting, with a shift to two rates with higher charges on luxury goods and lower charges on essentials, could encourage festive consumption, reduce the cost of necessities and make compliance easier. Additionally, the true test, which companies and investors are closely monitoring, will be striking a balance between state revenue requirements and consumer relief." said Praveen Nijhara, CEO of Hansa Research

By reducing GST on food, medicines, healthcare, personal care, and baby products, the government's main agenda is to ease the burden on middle-class households to uplift the demand in the economy.