GST Rates Revised: What Gets Cheaper

The Goods and Services Tax (GST) Council announced today that only two rates will remain from September 22 - 5 per cent and 18 per cent. There is a special rate of 40 per cent which will apply only to pan masala, cigarette, aerated water with added sugar, carbonated beverages, etc.

From groceries and fertilisers to footwear, textiles, and even renewable energy, a broad basket of goods and services is set to become more affordable. Items earlier taxed at 12 per cent and 28 per cent will now largely migrate to the other two slabs, making a wide range of products cheaper.

Ms Sitharaman said many items used by the middle class have been brought under 18 per cent. These include televisions, air-conditioners, and bikes under 350 cc.

We look at what has become cheaper:

Hon'ble Prime Minister Shri @narendramodi announced the Next-Generation GST Reforms in his Independence Day address from the ramparts of Red Fort.

Working on the same principle, the GST Council has approved significant reforms today.

These reforms have a multi-sectoral and... pic.twitter.com/NzvvVScKCF

— Nirmala Sitharaman Office (@nsitharamanoffc) September 3, 2025

Milk products: Ultra-high temperature (UHT) milk will now be tax-free (down from 5 per cent), while condensed milk, butter, ghee, paneer, and cheese have moved from 12 per cent to 5 per cent or nil in some cases.

Staple foods: Malt, starches, pasta, cornflakes, biscuits, and even chocolates and cocoa products will see rates reduced from 12-18 per cent to 5 per cent.

Dry fruits and nuts: Almonds, pistachios, hazelnuts, cashews, and dates, earlier taxed at 12 per cent, will now attract just 5 per cent.

Sugar and confectionery: Refined sugar, sugar syrups, and confectionery items like toffees and candy have shifted to the 5 per cent slab.

Other packaged foods: Vegetable oils, animal fats, edible spreads, sausages, meat preparations, fish products, and malt extract-based packaged foods have been moved to the 5 per cent slab.

Namkeens, bhujia, mixture, chabena and similar edible preparations ready for consumption form (other than roasted gram), pre-packaged and labelled to go from 18 per cent to 5 per cent.

Water, including natural or artificial mineral waters and aerated waters, not containing added sugar or other sweetening matter, nor flavoured to move from 18 per cent to 5 per cent.

Fertilisers are down from 12 per cent/18 per cent to 5 per cent.

Select agricultural inputs, including seeds and crop nutrients, have been rationalised from 12 per cent to 5 per cent.

Life-saving drugs, health-related products, and some medical devices have seen rate cuts from 12 per cent/18 per cent to 5 per cent or nil.

Entry-level and mass-use items like select electrical appliances will move from 28 per cent to 18 per cent.

Footwear and textiles have seen GST cut from 12 per cent to 5 per cent, reducing costs for mass-market products.

However, certain goods and services remain firmly under higher taxation.

Pan masala, gutkha, cigarettes, chewing tobacco, zarda, unmanufactured tobacco, and bidi will continue under existing high GST rates and compensation cess until outstanding cess-linked loans are cleared.

Additionally, the valuation of these products will now be shifted to Retail Sale Price (RSP) instead of transaction value, tightening compliance.

All goods (including aerated waters), containing added sugar or other sweetening matter or flavoured to go from 28 per cent to 40 per cent.

A new 40 per cent slab for sin and luxury goods remains, ensuring that items like cigarettes, premium liquor, and high-end cars don't see tax relief.

Imported armoured luxury sedans will be exempt only in special cases, such as those brought in by the President's Secretariat.

There is also exemption of GST on all individual life insurance policies whether term life, ULIP or endowment policies and reinsurance thereof to make insurance affordable for common people and increase insurance coverage in the country.

GST has been removed from Ultra-High Temperature (UHT) milk, prepackaged and labelled chena or paneer, and all Indian breads such as chapati, roti, paratha, parotta, etc.