GST rates rationalised, 28% and 12% rates removed.
Key common man items moved to 5%. Small cars at 18% tax rate.
Changes with effect from 22nd September 2025. GST registration process simplified for small and low risk businesses.
The GST council has recommended New reduced GST rates. The new rates are set to take effect from 22nd of September 2025.
The GST Council has recommended key changes in the GST Rates for many of items, which is set to spur the consumption and boost the economic growth in line with the announcement made by the Prime Minister Shri Narendra Modi from the ramparts of Red Fort on 15th August 2025.
GST rates rationalised for common man items, Health Items, food sector, Agriculture, consumer electronics.
Further GST rates of 12% and 28% have been removed. A simple citizen friendly two rate structure of 5% (Merit Rate) and 18% (Standard rate) has been kept. Additionally, 40% (De-merit rate) is kept for Luxury and sin goods.
Key Changes in GST rates
| S.No | Key Items | Tax rate Reduction |
1. | GST rates rationalised for common man items, Health Items, food sector, Agriculture, consumer electronics. | Rates Rationalised |
| 2. | All individual life insurance policies whether term life, ULIP or endowment policies and reinsurance thereof to make insurance affordable for the common man and increase the insurance coverage in the country | GST exempted |
| 3. | All individual health insurance policies (including family floater policies and policies for senior citizens) and reinsurance thereof to make insurance affordable for the common man and increase the insurance coverage in the country
| GST Exempted |
| 4. | GST rates simplified and rationalised
| Abolition of 12% and 28% slab rate.
Simple Citizen friendly 2 rate Tax structure -Merit rate 5% and Standard rate- 18%
Demerit rate of 40% for Luxury and sin goods and services |
| 5. | common man items such as, hair oil, toilet soap bars, shampoos, toothbrushes, toothpaste, Bicycles, Tableware, kitchenware, other household articles, et al | From 18% or 12% to 5% |
| 6. | Ultra-High Temperature (UHT) milk, Prepackaged and labelled chena or paneer; All the Indian Breads will see NIL rates (Chapati or roti, paratha, parotta, etc) | From 5% to Nil |
| 7. | food items such as packaged namkeens, Bhujia, Sauces, Pasta, Instant Noodles, Chocolates, Coffee, Preserved Meat, Cornflakes, Butter, Ghee, etc. | From 18% or 12% to 5% |
| 8. | Air-conditioning machines, All Television sets Dishwashing machines, Small cars, Motorcycles equal to or less than 350 CC | From 28% to 18% |
| 9. | All agricultural goods, such as tractors, agricultural, horticultural or forestry machinery for soil preparation or cultivation, harvesting or threshing machinery, including straw or fodder balers, grass or hay mowers, composting machines etc | From 12% or 5%
|
| 10. | All labour-intensive goods such as Handicrafts, Marble and travertine blocks, granite blocks, and Intermediate leather goods | From 12% or 5%
|
| 11. | Cement | From 28% to 18% |
| 12. | All 33 lifesaving drugs | From 12% to Nil |
| 13. | All medicines and 3 lifesaving drugs used for treatment of cancer, rare diseases and other severe chronic diseases | From 12% to Nil |
| 14. | All other drugs and medicines | From 12% to 5% |
| 15. | various medical apparatus and devices used for medical, surgical, dental or veterinary usage or for physical or chemical analysis | From 18% or 5%
|
| 16. | various medical equipment and supplies devices such as wadding gauze, bandages, diagnostic kits and reagents, blood glucose monitoring system (Glucometer) medical devices, etc | From 12% to 5% |
| 17. | Small Cars and Motorcycles equal to or below 350cc Small cars less than 1200 CC petrol and 1500 Diesel and less than 4000 mm in length | From 28% to 18% |
| 18. | buses, trucks, ambulances etc | From 28% to 18% |
| 19. | All auto parts irrespective of their HS code | 18% |
| 20. | manmade fibre | From 18% or 5% |
| 21. | Manmade Yarn | From 12% to 5% |
| 22. | Sulphuric acid, Nitric acid and Ammonia for Fertiliser Sector | From 18% or 5% |
| 23. | Renewable energy devices and parts for their manufacture | From 12% to 5% |
| 24. | Hotel accommodation services having value less than INR 7500 per unit per day | from 12% to 5% |
| 25. | All beauty and physical well-being services used by common man including services of gyms, salons, barbers, yoga centres, etc | From 18% or 5% |
