New GST Rates 2025: What’s Cheaper, What’s Costlier, and How It Affects You
The Goods and Services Tax (GST) in India is about to get its biggest revamp since launch. Starting September 22, 2025, the tax system will be simpler, with fewer slabs and big price cuts on essentials, healthcare, and household items. Let’s unpack everything you need to know about the New GST Rates 2025.
From Four Slabs to Two
Earlier, GST had four rates: 5%, 12%, 18%, and 28%. Now, the structure is reduced to just two slabs: 5% and 18%, along with a special 40% slab for luxury and sin goods like high-end cars, tobacco, and sugary drinks.
This simplification is being called GST 2.0—designed to make compliance easier and disputes fewer.
What’s Cheaper After the New GST Rates 2025?
- Groceries & Food: Packaged items like biscuits, chocolates, cheese, namkeens, and ghee are now at 5%. UHT milk, paneer, and chapatis are GST-free.
- Personal Care Products: Shampoo, toothpaste, soaps, and hair oil move from 18% to 5%.
- Electronics & Appliances: TVs (up to 32”), fridges, ACs, and washing machines drop from 28% to 18%.
- Vehicles: Small cars (petrol up to 1200cc, diesel up to 1500cc) and motorcycles up to 350cc are now at 18%.
- Healthcare: 33 life-saving drugs are exempt, most other medicines are at 5%, and medical devices like glucometers also fall under 5%.
- Insurance: Life and health insurance policies are now GST-exempt, lowering costs for policyholders.
- Agriculture: Tractors and farm machinery see GST slashed from 12% to 5%.
- Travel & Services: Budget hotel stays under ₹7,500 a night and services like gyms, salons, and yoga are now at 5%.
What’s Costlier Under the New GST Rates 2025?
- Luxury Cars & Big Bikes: Anything above 350cc, luxury SUVs, and imported cars will face 40% GST.
- Sugary Drinks & Energy Beverages: Aerated and caffeinated drinks move to the 40% slab.
- Tobacco & Pan Masala: Rates remain unchanged for now due to state compensation dues but are expected to shift to 40% later.
When Do the New Rates Apply?
The changes come into effect on September 22, 2025, just in time for Navratri, covering almost all goods and services.
How the New GST Rates 2025 Impact You
For middle-class families, this means real savings:
- Monthly household budgets could shrink by ₹500–₹1,000 depending on lifestyle.
- Grocery bills, personal care items, and basic healthcare will all feel lighter.
- Electronics and small vehicles become more affordable, giving festive shoppers a reason to celebrate.
The Bigger Economic Picture
The government estimates a short-term revenue impact of ₹48,000 crore a year due to rate cuts. While states worry about losing funds, the Centre believes more spending and higher compliance will offset this in the long run.
To support taxpayers, a GST Appellate Tribunal (GSTAT) will also be operational by end-September 2025, ensuring smoother dispute resolution.
Final Word
The New GST Rates 2025 make everyday life a little more affordable while keeping luxury and harmful products under heavy tax. Essentials like food, medicines, insurance, and personal care have become cheaper, directly benefiting households across India.
This reform isn’t just about numbers—it’s about putting more money in your pocket and simplifying a tax system that once felt too complicated.
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FAQs on New GST Rates 2025
1. What are the New GST Rates 2025 in India?
The new GST regime has simplified the tax structure to two main slabs: 5% and 18%, along with a special 40% rate for luxury and sin goods. The 12% and 28% slabs have been removed.
2. From when will the New GST Rates 2025 be effective?
The revised GST rates will apply from September 22, 2025, coinciding with the start of Navratri.
3. Which items have become cheaper under the New GST Rates 2025?
Everyday essentials like shampoos, soaps, toothpaste, biscuits, chocolates, and packaged foods now fall under the 5% slab. Medicines, medical devices, farm equipment, and budget hotel stays have also seen major tax cuts.