New GST rates: Which items will attract 5% tax and which ones 18%? Full details

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The Goods and Services Tax (GST) Council on Wednesday approved a new two-slab structure of 5% and 18%, bringing a major simplification to India’s indirect tax system. The new rates will take effect from September 22, replacing the earlier four-tier structure of 5%, 12%, 18% and 28%.

Customers at a grocery store, in Mumbai, Thursday, Sept. 4, 2025. The GST Council, in its meeting on Wednesday, simplified the GST from the current four slabs to a two-rate structure - 5 and 18 per cent. A special 40 per cent slab is also proposed for a select few items such as high-end cars, tobacco and cigarettes.(Representative image/PTI)

After a day-long marathon meeting of the GST council in New Delhi, finance minister Nirmala Sitharaman said the reforms were carried out with a focus on the common man.

The finance minister said, “We have reduced the slabs, there shall be only two slabs, and we are also addressing issue of compensation cess, ease of living, simplifying registration, return filing, and refunds.”

“Every tax on the common man's daily use items has gone through a rigorous review and in most cases the rates have come down drastically,” she added.

New two-slab structure

The 56th GST Council replaced the existing four-rate system to a simplified two-slab structure of 5% and 18%, with the exception of cigarettes, chewing tobacco and pan masala, which will remain under the higher category of 40%.

Under the revised structure, most personal-use and household items, including air conditioners and washing machines, will attract lower taxes as the government seeks to spur domestic consumption amid pressure from US tariffs.

What gets cheaper at 5% GST

Daily-use essentials, farm equipment, healthcare products and education supplies have largely moved to the 5% slab, giving relief to households and farmers.

1. Daily essentials

• Hair oil, shampoo, toothpaste, toilet soap, toothbrushes, shaving cream (down from 18%)
• Butter, ghee, cheese, dairy spreads (down from 12%)
• Pre-packaged namkeens, bhujia, mixtures (down from 12%)
• Utensils (down from 12%)
• Feeding bottles, napkins for babies, clinical diapers (down from 12%)
• Sewing machines and parts (down from 12%)

2. Healthcare

• Individual health and life insurance (down from 18% to Nil)
• Thermometers (18% → 5%)
• Medical grade oxygen (12% → 5%)
• Diagnostic kits & reagents (12% → 5%)
• Glucometers and test strips (12% → 5%)
• Corrective spectacles (12% → 5%)

3. Farm & agriculture

• Tractor tyres & parts (18% → 5%)
• Tractors (12% → 5%)
• Bio-pesticides, micro-nutrients (12% → 5%)
• Drip irrigation systems, sprinklers (12% → 5%)
• Agricultural, horticultural & forestry machines (12% → 5%)

4. Education

• Maps, charts, globes (12% → Nil)
• Pencils, sharpeners, crayons, pastels (12% → Nil)
• Exercise books, notebooks (12% → Nil)
• Erasers (5% → Nil)

What's under 18% GST

High-value goods such as automobiles and electronic appliances will now fall under the 18% slab, reduced from 28% earlier.

1. Automobiles

• Petrol & petrol hybrid, LPG, CNG cars (not exceeding1200 cc & 4000 mm) – 28% → 18%
• Diesel & diesel hybrid cars (not exceeding 1500 cc & 4000 mm) – 28% → 18%
• Three-wheeled vehicles – 28% → 18%
• Motorcycles (350 cc and below) – 28% → 18%
• Motor vehicles for transport of goods – 28% → 18%

2. Electronic appliances

• Air conditioners – 28% → 18%
• Televisions above 32 inches (including LED & LCD) – 28% → 18%
• Monitors and projectors – 28% → 18%
• Dishwashing machines – 28% → 18%

40% slab for sin goods

A separate 40% slab has been created for luxury and sin goods. This will cover: High-end cars, Tobacco and cigarettes

1. Tobacco and Pan Masala (Sin Goods)

• Pan masala
• Gutka
• Chewing tobacco
• Unmanufactured tobacco and tobacco refuse (excluding leaves)
• Cigarettes
• Cigars, cheroots, cigarillos, and similar substitutes

2. Aerated and Sugary Beverages

• Carbonated drinks
• Cold drinks with sugar
• Caffeinated carbonated beverages

3. Luxury Cars

• Petrol cars with engine capacity above 1200 cc
• Diesel cars with engine capacity above 1500 cc

4. High-End Motorcycles

• Motorcycles with engine capacity above 350 cc

5. Super-Luxury Marine and Aircraft

• Yachts
• Personal aircraft, including helicopters

6. Other Sin or Luxury Items (broader category)

• Coal, lignite, peat
• Online gambling and gaming services

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