By Sushant Agarwal
Published on | Sep 04, 2025
GST overhaul: two regular slabs (5% & 18%) announced by the GST Council — coming into effect Sept 22 (first day of Navaratri).
Current four slabs (5, 12, 18, 28) replaced by two main slabs: 5% and 18%. A special 40% slab is proposed for select items.
High-end cars, yachts, aircraft for personal use, racing cars & aerated sugary drinks → to be taxed at 40%.
Tobacco, gutkha, pan masala, bidis etc. will stay at 28% + cess till COVID-era state compensation loans are repaid. After that → 40%.
Premiums for individual life and health insurance (including family floaters) are now exempt from GST — down from 18%.
Daily staples get cheaper: plain chapati/roti, paratha, UHT milk, chena/paneer, pizza bread, khakra moved to nil or lower rates.
Butter, ghee, nuts, milk products, juices, ice cream, biscuits, cereals, namkeen, coconut water & more now at 5% GST.
Small stationery items such as erasers, maps, pencil sharpeners and exercise books are nil (from 5%).
Shampoo, talcum powder, toothpaste, toothbrushes, face powder, soap, hair oil → GST cut from 18% to 5%.
Tooth powder, feeding bottles, kitchenware, umbrellas, bicycles, combs etc. → down from 12% to 5%.
Major consumer goods taxed less: ACs, dishwashers, TVs now 18% (from 28%). Motorcycles up to 350 cc and many small petrol/LPG/CNG cars move to 18%.
Petrol cars >1,200 cc, diesel >1,500 cc, bikes >350 cc, yachts, private planes, racing cars & sugary drinks taxed 40%; EVs stay 5%.
Cement tax cut: 28% → 18%. Labour-intensive sectors, agriculture and health are expected to benefit from rate rationalisation.
Union FM Nirmala Sitharaman said decisions were unanimous and focused on the common man: “I think it will have a very positive impact on the GDP.”