New GST Rates: The GST Council has eliminated four tax slabs and implemented two main slabs: 5% and 18%. A tax rate of 40% will apply to certain specific items. The new system came into effect on September 22. This will make some items cheaper, but luxury and “sin” goods may become more expensive.
New GST Rates: From today, September 22, the way taxes are levied in the country has changed. The government recently made a major decision regarding GST, which is expected to bring relief to both consumers and businesses. Instead of four different tax slabs, there will now be only two main slabs: 5% and 18%. A tax of 40% will apply to certain specific items. This new system came into effect across the country today, September 22, 2025.
What is the new GST structure?
The 56th meeting of the GST Council was held on September 3, where these changes were finalized. Previously, there were four tax slabs in the country: 5%, 12%, 18%, and 28%. These have now been reduced to just two slabs: 5% and 18%. Additionally, a tax of 40% will apply to certain goods and services. These are the same items on which the compensation cess was previously levied; that cess has now been abolished and incorporated directly into the GST.
These items will become more expensive from today
The government has placed certain items in the 40% tax bracket, including those considered luxury goods or harmful to health. These primarily include “sin goods,” such as tobacco and related products. Cigarettes, bidis, pan masala, gutkha, chewing tobacco, cigars, cigarillos, nicotine inhalers, tobacco extracts, and online gaming/gambling services are now subject to a 40% tax.
Additionally, luxury cars are also included in this tax bracket. Previously, cars with an engine capacity above 1,200cc and a length exceeding 4 meters were subject to 28% GST and a 22% cess. Now, they will be taxed directly at 40%. However, the overall tax burden has decreased slightly, which could potentially lead to lower prices for these cars.
Motorcycles with engine capacities above 350cc will now be more expensive. Previously, they were subject to 28% GST and a 3% cess, but now the tax will be a direct 40%. Similarly, soft drinks and carbonated beverages like Coca-Cola, Pepsi, Fanta, Mountain Dew, flavored water, etc., will now attract a 40% tax. Previously, these products were taxed at 28%.
Products and Services with 18% Tax
Some items were already in the 18% tax bracket and will remain there, but their prices may increase. These include air conditioners, food from premium restaurants, consumer durables such as refrigerators, washing machines, and air conditioners, beauty and grooming services from salons and spas, premium smartphones, and imported gadgets.
This new GST structure aims to simplify and make the tax system more transparent. While some things will become cheaper for the average consumer, others will become more expensive. It remains to be seen how this change will impact the market and consumers.
