GST Reforms: FAQs On What Changes

The GST Council, chaired by Finance Minister Nirmala Sitharaman, held its 56th meeting on September 3 in New Delhi and announced changes in the rates. Here are all your questions answered.

When will the revised GST rates take effect?

The changes in GST rates on goods and services will apply from September 22, 2025.

Where will the revised GST rates be notified?

The new rates will be published on the CBIC website.

Has UHT (Ultra High Temperature) milk been exempted?

UHT milk is exempt, and it is on par with other dairy products. Previously subject to an 18% tax (soy milk at 12%), plant-based milk beverages are now subject to 5% GST.

Why were rates revised only for specific types of Indian bread?

Bread was previously exempt from GST, while other goods, including pizza bread, roti, and paratha, were subject to varying rates of taxation. Now, all types of Indian breads, whatever their name, have been exempted.

Why has the GST on carbonated fruit beverages been increased?

These goods were earlier charged with both GST and a compensation cess. As the cess has now been removed, the GST rate has been increased to keep the overall tax at the same level as before.

Why is paneer treated differently from other kinds of cheese?

Paneer is taxed differently because unpackaged paneer was already exempt. The change now applies only to pre-packaged forms, mainly to support small-scale producers.

Has GST on all agricultural machinery and equipment been reduced?

All agricultural machinery and equipment now have a 5% GST rate instead of 12%.

What is the GST rate on medicines and medical devices?

Most medicines attract a concessional GST rate of 5% (except those at nil rate), and the same 5% rate applies to all medical, surgical, dental, and veterinary devices unless specifically exempted.

What is the revised GST rate on small cars?

The rate has been reduced from 28% to 18%. Small cars mean petrol/LPG/CNG cars up to 1200 cc and 4000 mm length, and diesel cars up to 1500 cc and 4000 mm length.

What is the new GST rate on mid-size and big cars?

All mid-size and big cars now attract 40% GST with no compensation cess, replacing the earlier 28% GST plus 17% to 22% cess.

What is the GST rate on larger cars and utility vehicles?

Vehicles longer than 4000 mm or 1500 cc are subject to 40% GST. Utility vehicles (SUV, MUV, MPV, XUV) with an engine of over 1500 cc engine, more than 4000 mm length, and ground clearance above 170 mm also face 40% GST, without cess.

What is the GST rate on 3-wheelers, buses carrying over 10 passengers, ambulances, and goods vehicles like lorries and trucks?

All of these car vehicles now have a GST rate of 18%, compared to the earlier 28%.

What is the GST rate on motorcycles?

Motorcycles up to 350cc (including 350cc) attract 18% GST, while those above 350cc attract 40% GST.

Has the GST rate on bicycles and parts been reduced?

Yes, the rate has been lowered from 12% to 5%.

Why is the rate of 40% referred to as a "special rate"?

Since it only applies to certain luxury and "sin" goods, the 40% GST rate is a special rate.

Which life and health insurance policies are covered under the GST exemption?

The exemption covers all individual life insurance policies and all individual health insurance policies (including family floater and senior citizen plans).

For toilet soap bars, what is the GST rate?

Toilet soap bars attract 5% GST.

What is the GST rate for spectacles and goggles?

Corrective spectacles and goggles now attract 5% GST, down from 12% and 18%. Other goggles remain at 18%.

What is the GST rate on TVs, dishwashers, air conditioners and monitors?

The 28% GST on air conditioners and dishwashers has been reduced to 18%. All TVs and monitors will now be subject to a flat 18% tax.