GST Rate Changes Effective 22nd September 2025: What Moves, What Stays
By Parashuram Singade | 20 Sep 2025
India’s GST Council has rolled out major slab reforms, effective 22nd September 2025. The idea is to simplify rates, reduce confusion, and bring relief for essential items — while tightening the screws on luxury and sin goods.
Here’s a breakdown you can share with your readers.
The Big Shift
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12% and 28% slabs are gone for most items.
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Standard slabs will now look like: 0%, 5%, 18%, and a new 40% “sin/luxury” rate.
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Essentials are cheaper, common goods are simplified, and non-essentials get taxed heavier.
What Gets Cheaper (12% → 5%)
Products that were earlier taxed at 12% will now mostly slide into the 5% bracket:
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Packaged personal-care items (soap, shampoo, toothpaste).
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Furniture and wood products.
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Agricultural machinery and inputs.
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Small household goods.
👉 Translation: everyday spends go down a notch.
What Becomes Standard (28% → 18%)
High-ticket items from the 28% slab are cooling down to 18%:
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Appliances: air conditioners, refrigerators, large TVs.
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Passenger vehicles: small cars (petrol up to 1200cc, diesel up to 1500cc).
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Motorcycles up to 350cc.
👉 Middle-class families and small businesses benefit the most here.
The New Heavyweight (40%)
Luxury and sin goods won’t be spared. A new 40% slab kicks in for:
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Tobacco products.
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Aerated and sugary beverages.
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High-end cars and premium bikes.
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Select luxury goods.
👉 Expect no mercy here — the intent is to discourage consumption and boost revenue.
What Stays the Same
Not everything is touched:
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5% slab continues for core essentials (basic food items, common daily needs).
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18% slab continues for mobile phones, laptops, most digital products.
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0% / exempt: healthcare, education, and select food remain free from GST.
Key Takeaways
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Consumers: Relief on essentials and appliances, but brace for luxury price hikes.
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Businesses: Need to re-tag stock, update invoicing software, and inform customers.
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Investors & Traders: Watch how demand shifts — FMCG and appliance sectors may get a bump.
GST Slab Changes at a Glance (Effective 22 Sept 2025)
| Category / Item | Old GST Rate | New GST Rate | Notes |
|---|---|---|---|
| Soap, shampoo, toothpaste, daily-use packaged goods | 12% | 5% | Everyday essentials now cheaper |
| Furniture, wood products, agri machinery | 12% | 5% | Boost for rural/agri sector |
| Appliances (AC, fridge, large TVs) | 28% | 18% | Major relief for middle-class buyers |
| Small cars (petrol ≤1200cc, diesel ≤1500cc) | 28% | 18% | Cuts cost of ownership |
| Motorcycles ≤350cc | 28% | 18% | More affordable for youth & commuters |
| Mobile phones, laptops | 18% | 18% | Unchanged |
| Basic food items (rice, wheat, pulses) | 0% | 0% | Unchanged — exempt continues |
| Education & healthcare services | Exempt / 0% | Exempt / 0% | Unchanged |
| Tobacco, cigarettes | 28% + cess | 40% | Stronger deterrent pricing |
| Aerated/sugary drinks | 28% + cess | 40% | “Sin tax” to discourage consumption |
| High-end cars, premium bikes | 28% + cess | 40% | Clear luxury segment targeting |
⚖️ Final word: This reform is about clarity and fairness. Simpler slabs mean fewer disputes, fewer surprises at billing counters, and a system that feels more rational.