Key Highlights:
- The current four-rate GST structure (5%, 12%, 18%, 28%) has been reduced to two main slabs: 5% and 18%.
- A special 40% GST slab will apply to luxury and sin goods such as high-end vehicles, tobacco, and gambling.
- Life-saving medicines, insurance, and essential education items are now taxed at 0%.
- The changes are expected to lead to a revenue loss of ₹47,700 crore, according to West Bengal Minister Chandrima Bhattacharya.
- All decisions were unanimous, confirmed Union Finance Minister Nirmala Sitharaman.
These reforms have been carried out with a focus on the common man. Every tax on daily-use items has gone through rigorous review, and in most cases, the rates have come down drastically,” said Sitharaman
GST Rate: 0% – Tax-Free Items
- 33 Life-Saving Medicines: Including cancer drugs, rare disease medications
- Health & Life Insurance Policies
- Educational Supplies: Maps, charts, globes, pencils, sharpeners, crayons, pastels, exercise books, notebooks, erasers
- Food Essentials: UHT milk, paneer (pre-packaged), pizza bread, khakhra, chapati, roti
GST Rate: 5% – Essential and Common-Use Items
Personal Care:
- Hair oil, shampoo, toothpaste
- Toilet soap, toothbrush, shaving cream
Food & Kitchen:
- Butter, ghee, cheese, dairy spreads
- Namkeens, utensils
Baby Care:
- Feeding bottles, baby napkins, clinical diapers
Domestic Goods:
- Sewing machines and parts
Medical Equipment:
- Thermometers, medical-grade oxygen
- Diagnostic kits and reagents
- Glucometer and test strips
- Corrective spectacles
Agriculture & Machinery:
- Tractor tyres, tractors and parts
- Specified bio-pesticides, micronutrients
- Drip irrigation systems, sprinklers
- Soil preparation machines for agriculture, horticulture, forestry
GST Rate: 18% – Mid-Range Goods & Vehicles
Vehicles:
- Petrol/LPG/CNG cars (≤1200cc, ≤4000mm)
- Diesel cars (≤1500cc, ≤4000mm)
- Petrol/Diesel hybrid cars
- Motorcycles (≤350cc)
- 3-wheelers and goods transport vehicles
Home Appliances:
- Air conditioners
- Televisions (above 32”), including LED & LCD
- Monitors and projectors
- Dishwashing machines
Heavy Machinery:
- Road tractors with engine capacity >1800cc
GST Rate: 40% – Luxury & Sin Goods
- Tobacco Products: Cigarettes, gutka, chewing tobacco, bidis, pan masala
- Sugary Beverages: Aerated drinks, caffeinated beverages, sugary non-alcoholic drinks
- Luxury Vehicles: Motorcycles >350cc, personal aircraft, yachts
- Luxury Items: Revolvers, pistols, smoking pipes
- Gambling & Betting: Casinos, horse racing, online money gaming, lottery
When Will the New GST Rates Be Implemented?
The revised GST rate structure will be effective from September 22, 2025.
Why This Matters:
This move is expected to simplify the tax structure, boost compliance, and make essential goods more affordable. However, states may face short-term revenue losses due to reduced rates on mass-consumption items.