Key Highlights of GST Reform (Next-Gen GST / GST 2.0)
1. New Slab Structure
- The old four-tier GST system (5%, 12%, 18%, 28%) has been consolidated into a two-tier structure: 5% and 18%.
- A 40% “sin and luxury” slab has been introduced for select high-end and harmful items.
2. Implementation Date
- The new GST rates will be effective from 22 September 2025, coinciding with the start of Navratri.
3. Which Items Are Now Cheaper (0%, 5%, 18%)
0% Rate (Tax Exempt)
- Life-saving medicines, certain cancer and rare disease drugs
- Individual life and health insurance policies
- Staples & educational supplies like UHT milk, paneer, roti, maps, globes, notebooks, erasers
5% Rate
- Daily essentials & household items: hair oil, soap, toothpaste, bicycles, kitchenware
- Packaged foods: namkeen, noodles, chocolates, butter, ghee, cornflakes
- Appliances & renewable items: TVs, ACs, white goods, solar/wind equipment, renewable energy parts
- Medical devices related to diagnostics
- Agricultural equipment: tractors, farm machinery, fertilizers
- Beauty & wellness services: salons, gyms, yoga
18% Rate
- Small cars (≤1200 cc petrol, ≤1500 cc diesel, ≤4 m length)
- Motorcycles ≤350 cc, auto components, cement, buses, trucks, three-wheelers
- Appliances & electronics (some moved here from 28%)
40% Sin and Luxury Slab
- Tobacco products (cigarettes, gutka, pan masala – some remain under old rates until debts are cleared)
- Soft drinks, carbonated and caffeinated beverages
- Luxury vehicles, high-powered bikes (>350 cc), yachts, helicopters
- Casinos, lotteries, betting, IPL tickets
Summary Table
| GST Rate | Applicable Items |
|---|---|
| 0% | Life-saving medicines, life & health insurance, staple foods, educational supplies |
| 5% | Daily essentials, packaged foods, household goods, renewable energy equipment, agri machinery, beauty services |
| 18% | Small vehicles & components, cement, electronics & appliances |
| 40% | Soft drinks, tobacco, luxury vehicles, premium bikes, yachts, casinos, betting, IPL tickets |
