In a sweeping reform of India’s indirect tax system, the government has announced a ‘Next Gen GST’ structure with just two main slabs—5% and 18%—alongside a steep 40% slab for luxury and sin goods. The move will replace the existing four-tier regime of 5%, 12%, 18% and 28%, simplifying the Goods and Services Tax (GST) structure.
Everyday Essentials Get Cheaper
Under the new system, daily essentials like groceries, soaps, shampoos, toothpaste and hair oil will fall under the 5% slab, making household purchases cheaper. Electronics such as air-conditioners, refrigerators, televisions and dishwashers, previously taxed at 28%, will now attract 18% GST, leading to lower consumer prices.
Salon and Fitness Services Turn Affordable
In a boost to construction and housing, cement, construction materials and small cars (under 1,200cc engines) will also see their GST rate drop from 28% to 18%. Services like salons, gyms and yoga centres will now be taxed at 5% (without input tax credit), compared to 18% earlier, reducing bills for consumers.
Two-Wheeler and Car Buyers Face Mixed Impact
For the automobile sector, motorcycles up to 350cc move to the 18% bracket, while high-end bikes and cars with engines above 1,200cc will face the new 40% luxury tax slab. Entertainment too will see a shake-up: IPL tickets will attract 40% GST, meaning a ₹500 seat will now cost ₹700, while other sports remain taxed at 18% or exempt.
Cigarettes and Gutka Under Steep Levy
Meanwhile, sin goods such as cigarettes, gutka and pan masala will be kept outside the regular slabs but will face the same 40% levy.
Officials said the overhaul is designed to simplify compliance, reduce litigation and boost demand. “Lower taxes on essentials and consumer goods will leave more money in people’s hands, spurring consumption and giving the economy a lift,” the government said in its statement.
