A comprehensive overhaul of India’s consumption tax has been approved by the Goods and Services Tax (GST) Council. This reform, the first since its introduction in 2017, significantly reduces duties on essential household items, medicines, small cars, and appliances. The changes will impact a wide range of products, including toothpaste, insurance, tractors, and cement.
The rate overhaul has been approved under the council, which has confined slabs from 18 to 5%. It is to increase the spending on domestic goods and cushion the economic blow of the US tariffs levied on Indian goods.
The current four slabs – 5, 12, 18, and 28 per cent have been reduced to the two-rate structure of 5 per cent and 18 per cent. On a few specific items like high-end cars, a special 40% slab is proposed.
The new GST rates will come into force from 22nd September 2025.
Items List Which Gets Cheaper
This is the list of items that became cheaper in the 56th GST Council meeting:
Food and Beverage
The earlier 5% tax on all forms of chapati and paranthas shall be brought down to nil. On ultra-high temperature milk, chena or paneer, pizza bread, and khakra tax rate has been reduced to nil from 5%.
Read Also: GST Rate on Milk, Paneer & Dairy Products with HSN Code
From 12% the tax rate has been reduced to 5% on the common use food items and beverages, ranging from butter and ghee to dry nuts, condensed milk, sugar boiled confectionery, jam and fruit jellies, tender coconut water, namkeen, drinking water packed in 20-litre bottles, fruit pulp or fruit juice, beverages containing milk, ice cream, pastry and biscuits, corn flakes and cereals, and sugar confectionery. Now the new tax rate is 5% on other fats and cheese, which earlier was 12%.
Stationary Items
Maps, charts, globes, pencils, sharpeners, crayons and pastels, exercise books, and notebooks will be levied to nil from 12 per cent. Likewise, nil charge is there on the erasers.
Household Items
From 12% to 5% there is a rate reduction on items like tooth powder, feeding bottles, tableware, kitchenware, umbrellas, utensils, bicycles, bamboo furniture, and combs. On items like Shampoo, talcum powder, toothpaste, toothbrushes, face powder, soap, and hair oil, a rate reduction is there to 5 per cent from 18 per cent.
Insurance and Policies
No tax will be there on the individual life and health insurance policies. There will be a 5% charge on the supply of service of third-party insurance of goods carriage with input tax credit (ITC) from 12 per cent with ITC.
Items List Which Gets Costlier
Here is the list of items that are costlier in the GST council meeting:-
Aerated, Caffeinated Drinks
Popular soft drinks like Coca-Cola and Pepsi, including other non-alcoholic beverages, will become more expensive after the council approved a tax increase on carbonated beverages from 28% to 40%. Caffeinated beverages to be charged 40 per cent, which earlier was 28%.
Vehicles
A 40 per cent levy is there on all automobiles above 1,200 cc and longer than 4,000 mm, as well as motorcycles above 350 cc, yachts and aircraft for personal use, and racing cars.
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