The Goods and Services Tax (GST) in India has gone through many revisions since its introduction. The central aim has always been to simplify the tax system and provide relief to the common people as well as ensure fair compliance for industries. In the 56th GST Council meeting, the Finance Ministry announced a major reshuffle in tax rates across several categories such as automobiles, food products, beverages, health, insurance, beauty services, and agricultural equipment. These new GST rates will officially come into effect from 22 September 2025, right before the Navratri festive season.
In this article, we will take a complete look at the new GST changes, sector-wise impact, and how these changes will affect your daily expenses and industries. For a deeper perspective on reforms, you can also check our detailed guide on GST reforms and their impact on US tariffs and our extended article on new GST rates and their benefits.
Key Highlights of GST Council’s 56th Meeting
- 12% and 28% GST slabs removed, only 5% and 18% slabs continue, while a new 40% special slab introduced.
- Relief given to daily essentials like soaps, shampoos, dairy products, and food items.
- Major cut in tax rates for small cars, motorbikes, and electronic appliances.
- Health insurance made tax-free.
- Agricultural equipment and tractors moved to lower tax slab.
- Luxury and harmful goods like tobacco, pan masala, large cars, and private aircraft shifted to the 40% slab.
Impact on Sports and Entertainment
One big question people raised was about GST on entry tickets for sporting events like the IPL and other recognized sports leagues. The government clarified:
- If the ticket price is ₹500 or below, it remains exempt from GST.
- If the ticket price is above ₹500, GST at 18% will continue.
This is a balanced move, as it encourages wider participation in sports events without making high-value tickets completely tax-free.
Food and Beverages
Food and beverages are directly connected to the common man’s budget, so changes here bring noticeable impact.
Dairy and Plant-Based Milk
- Earlier, UHT (Ultra High Temperature) milk had GST, while normal dairy milk was exempt. Now, UHT milk has also been exempted.
- Plant-based milk drinks (almond, oats, rice milk) earlier attracted 18% GST and soy milk drink 12% GST. Now all have been reduced to just 5%.
Indian Bread Products
Earlier, there was confusion over tax on roti, paratha, pizza bread, and porotta. Now, all types of Indian bread have been exempted from GST.
General Food Products
- Packaged items like noodles, namkeen, butter, and ghee will now attract only 5% GST instead of higher earlier rates.
- Any food product not falling under a special category will now have a flat 5% GST.
Health and Insurance Sector
Health-related expenses are always sensitive, and this time, the council has given major relief:
- Health insurance: Previously taxed at 18%, now made 0% (completely tax-free).
- Medical devices and diagnostic kits: Now 5% GST on most devices including thermometers, oxygen, diagnostic kits, and surgical equipment.
- Medicines: Not fully exempted to avoid blocking Input Tax Credit (ITC). Keeping them under GST ensures manufacturers can claim ITC, which helps in keeping final costs stable.
This is one of the most people-friendly changes in the new GST regime.
Automobiles Sector
The automobile industry is a major contributor to GST collection, and changes here directly affect middle-class families:
- Small petrol/LPG/CNG cars (up to 1200cc, length 4000mm): GST reduced from 28% to 18%.
- Small diesel cars (up to 1500cc, length 4000mm): GST reduced to 18%.
- Motorcycles: GST cut from 28% to 18%.
This will make budget-friendly cars and two-wheelers more affordable. However, large cars (petrol above 1200cc and diesel above 1500cc) are placed in the 40% slab, keeping luxury vehicles costlier.
Beauty and Personal Care Products
Products used in everyday life like soaps, shampoos, and powders will now be more affordable:
- Soap bars, shampoos, toothpaste: Reduced from 18% to 5%.
- Face powder and shaving cream: Brought under 5% GST.
- Liquid soaps: Still taxed separately due to different consumer base.
This directly reduces monthly household expenses for middle-class families.
Agricultural Sector
Farmers also received relief through reduced taxation on essential machinery and equipment:
- Tractors: Reduced from 12% to 5%.
- Tractor tyres: Now at 5%.
- Irrigation systems, threshers, harvesters, compost-making machines: Brought down from 12% to 5%.
However, tractors have not been made completely tax-free because that would block ITC benefits for manufacturers.
Electronics and Appliances
Several big-ticket household appliances have also been made more affordable:
- Air conditioners: Reduced from 28% to 18%.
- Televisions above 32 inches: Reduced from 28% to 18%.
- Washing machines: Reduced from 28% to 18%.
This is a welcome move as these items are now considered basic necessities in middle-class households.
Education Sector
Education-related materials are also made cheaper:
- Maps, charts, globes: GST removed (0%).
- Pencils and crayons: GST removed (0%).
- Exercise books: Reduced from 5% to 0%.
This helps parents and students by lowering education-related expenses.
Luxury and Harmful Goods at 40% Slab
The government introduced a special 40% GST rate on luxury and harmful goods to keep them expensive and discourage over-consumption:
- Motorcycles above 350cc.
- Pan masala, gutkha, tobacco, and bidi.
- Aerated drinks with sugar or caffeine.
- Luxury yachts, private aircraft, and helicopters.
- Large cars beyond standard capacity.
This ensures that while daily essentials get cheaper, luxury and harmful items remain heavily taxed.
Why Were Some Products Not Made Fully Tax-Free?
The government explained that making certain products completely tax-free blocks Input Tax Credit (ITC), which eventually raises costs for manufacturers and pushes prices higher for consumers. By keeping a small GST rate, the ITC chain remains intact, and overall prices stay stable.
From When Will New GST Rates Apply?
All the revised GST rates will be applicable from 22 September 2025. This timing is strategic, as it comes right before the festive season, helping boost demand and offering relief to consumers.
Conclusion
The new GST structure shows a balanced approach—daily essentials, healthcare, education, and farming equipment are made cheaper, while luxury goods and harmful products face higher taxation. This aligns with the government’s vision of making GST simpler, consumer-friendly, and fair for industries.
