India Implements New GST Rates from September 22

New Delhi, September 21, 2025 — India is set to roll out the biggest overhaul of the Goods and Services Tax (GST) since its launch in 2017. Beginning September 22, coinciding with the first day of Navratri, a simplified two-tier tax structure will come into effect nationwide. The GST Council has approved a major shift that reduces the burden on essential goods while placing higher taxes on luxury and sin products.

Under the new framework, most goods and services will now fall under two main slabs—5% and 18%, while ultra-luxury and sin goods will be taxed at 40%. This reform is aimed at making the system more transparent and consumer-friendly, while easing compliance for businesses.

Stay informed with the latest news. Follow DXB News Network on WhatsApp Channel 

Essential Food Items Get Cheaper

Basic food items will now attract zero or minimal GST. Ultra High Temperature (UHT) milk, packaged paneer, roti, pizza bread, and khakhra have moved to 0% tax from the earlier 5% slab. Dairy products including butter, ghee, cheese, and condensed milk will now be taxed at 5%, down from 12%–18%. Even chocolates and pasta have seen their rates cut to 5% from 18%.

Price Drop for Dry Fruits & Spices

Dry fruits, dried nuts, malt, starches, vegetable extracts, sausages, and sugar-based products—all previously in the 12%–18% range—will now be taxed at 5%, making festive cooking and gifting more affordable.

Beverages Under Highest Slab

Sugary, caffeinated, and aerated beverages will see a sharp rise, now taxed at 40% compared to the earlier 18%–28% range. This includes packaged coconut water, soya milk drinks, carbonated fruit juices, and other high-sugar soft drinks.

Sin Goods Under Strictest Taxation

Pan masala, tobacco, cigars, and cigarettes have been moved to the 40% slab, replacing the earlier 28% plus cess structure. However, bidis will see some relief, dropping from 28%+cess to 18% GST.

Industrials, Healthcare & Daily Needs

Cement has been lowered to 18% from 28%, while coal, lignite, and peat will now be taxed at 18% instead of 5%, aligning the rates.
Healthcare has received a boost—medical oxygen, diagnostic kits, surgical supplies, and essential drugs have been reduced to 5% from 12%.

Lifestyle and household goods like furniture, utensils, toys, musical instruments, toiletries, and personal care items will now attract just 5% GST, reduced from 12%–18%.

Automobile & Luxury Goods

Motorcycles up to 350cc, scooters, small cars, and bicycles have been revised to 18% GST from 28%. High-end motorcycles, luxury cars, yachts, aircraft, and pistols, however, will now attract the maximum 40% tax.

Entertainment & Services

Cinema tickets priced at ₹100 or less will be cheaper with 5% GST, while tickets above ₹100 will fall under the steep 40% slab.
Hotels charging between ₹1,001–₹7,500 per night will see a tax cut from 12% to 5%. Meanwhile, beauty and wellness services such as salons, gyms, and spas will be taxed at 5%, down from 18%.

Insurance premiums for life, health, and general coverage, along with charitable education and healthcare services, have been made GST-free (0%), providing major relief to households.

Official Statement

Announcing the reform, Finance Minister Nirmala Sitharaman said: “The revised GST rates will take effect from September 22, coinciding with Navratri’s first day. The intent is to simplify the system by moving most products into the 5% and 18% brackets, while ensuring luxury and sin goods bear higher taxation. This reform balances affordability for consumers and revenue stability for the government.”

With this structural shift, India aims to streamline GST into a more efficient, consumer-friendly system that reduces costs on essentials while keeping a firm hand on luxury spending and harmful products.