New GST Rates Explained: What’s Cheaper and Costlier Starting September 22, 2025

India is set to implement new GST rates from September 22, 2025, following the 56th GST Council meeting chaired by Finance Minister Nirmala Sitharaman. These GST reforms 2025 mark a major overhaul of the tax system, simplifying the multi-tier structure into a more consumer-friendly model often referred to as GST 2.0.

The revised GST framework will feature three main slabs:

GST Rate Slabs Effective from September 22, 2025

GST Slab	Applicable Items
5%	Toiletries (toothpaste, shampoo, soap, toothbrush, shaving cream), butter, ghee, cheese, dairy spreads, namkeens, baby feeding bottles, napkins, sewing machines & parts, medical supplies (thermometers, diagnostic kits, glucometers), tractor tyres & parts
18%	Air conditioners, TVs over 32 inches, dishwashers, monitors, projectors, small cars, appliances, instant noodles, sauces, coffee, chocolates, ghee & butter (other than 5% items)
40%	Luxury and sin goods: high-capacity cars, cigarettes, pan masala, gutka, carbonated beverages

With the new GST rates coming into effect, consumers and businesses can now clearly see which items will become cheaper and which goods will face higher taxation, making it easier to plan expenses and compliance.

This restructuring eliminates the previous 12% and 28% slabs, aiming to make compliance easier and reduce the overall burden on consumers while targeting harmful consumption with higher taxation.

Items Becoming Cheaper

Under the new GST rate slabs, several categories will see reduced taxation:

Toiletries like toothpaste, toothbrushes, and dental floss will now attract 5% GST.
Food staples such as biscuits, chocolates, cornflakes, and dry fruits will also fall under the 5% slab.
Dairy products, including UHT milk and paneer, will be taxed at 5%, with butter and ghee either 5% or nil.
Electronics and appliances, including TVs, air-conditioners, and refrigerators, will now attract 18% GST.
Construction materials, such as cement, will see GST cuts from 28% to 18%, potentially lowering housing and construction costs.

Items Becoming Costlier

The introduction of the 40% slab will increase prices of certain luxury and sin goods:

Tobacco products like cigarettes, bidi, gutkha, and pan masala.
Sugary beverages and aerated drinks.
High-end automobiles and luxury vehicles.

These changes reflect the government’s goal to both curb consumption of harmful products and generate additional revenue through GST reduction and cuts on essentials.

The new GST implementation date aligns with the start of the festive season, providing consumers with relief on everyday items while encouraging responsible spending on luxury products.

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