Latest GST Changes 2025 – Reduced and Increased Taxes.

The 56th GST Council Meeting (September 2025) introduced the most extensive restructuring of GST since 2017. The intention: simplification, relief for consumers, and better compliance.

Key Highlights of the GST Reform

1. Simplified Tax Slabs

• Earlier: 0%, 5%, 12%, 18%, 28% + cess.
• Now: Two main slabs – 5% and 18%. Essentials at nil, luxury/sin goods at 40%.

2. Major Reductions

• Essentials: soaps, toothpaste, bread, paneer, cheese, butter moved to 5% or nil.
• Healthcare: 33 life-saving drugs nil-rated; other medicines at 5%.
• Agriculture: farm machinery and irrigation tools 12% → 5%.
• Consumer durables: two-wheelers, small cars, TVs, ACs, dishwashers 28% → 18%.
• Renewable energy equipment: 12% → 5%.

3. Rate Increases

• Sin/luxury goods: tobacco, pan masala, gutkha, aerated drinks taxed at 40%.
• Some luxury services now under higher slabs (hotel suites above defined tariff brackets).

4. Institutional Changes

• GST Appellate Tribunal (GSTAT) operational by December 2025 for quicker resolution of disputes.
• Revamped annual returns for simpler compliance.

5. Practical Reliefs

• No mandatory new price stickers on unsold goods manufactured before 22 Sept 2025.
• Rail Neer bottled water price reduced because GST dropped from 18% → 5%.

Why These Changes?

• To simplify GST into fewer slabs and reduce disputes.
• To make essentials and healthcare affordable.
• To increase demand for middle-class goods.
• To discourage harmful products with higher taxes.
• To reduce litigation through GSTAT.

Official Notifications

• Press Release, PIB – 56th GST Council Meeting
• GST Council – Annexure of Rate Changes
• CBIC GST Notifications – https://cbic-gst.gov.in → GST Law → Notifications.
• GST Council Updates – https://gstcouncil.gov.in → Press Releases & Decisions.

FAQs on GST Reform 2025

1. What are the new GST slabs?

Two major slabs: 5% and 18%. Essentials may be nil, luxury/sin goods at 40%.

2. What goods became cheaper?

TVs, ACs, motorcycles, soaps, toothpaste, paneer, cheese, butter, medicines, farm equipment.

3. Which goods became costlier?

Tobacco, pan masala, gutkha, aerated drinks, luxury items.

4. How much tax on medicines now?

Life-saving drugs → Nil. Other medicines → 5%.

5. Is paneer now tax-free?

Yes, pre-packaged paneer is nil-rated.

6. Are cars cheaper now?

Small cars moved from 28% → 18%.

7. What about bikes?

Motorcycles ≤ 350cc are now taxed at 18% instead of 28%.

8. Has GST on agriculture goods reduced?

Yes, farm machinery and irrigation tools are now 5%.

9. What about dairy products?

Butter, cheese, condensed milk → 5%. UHT milk → Nil.

10. What is the new rate on TVs and ACs?

18% instead of 28%.

11. Is bread taxable?

No, it remains nil-rated.

12. What happens to pan masala and gutkha?

Tax increased to 40%.

13. Will consumers actually see lower prices?

Government has warned e-commerce and retailers to pass on benefits or face action.

14. Can I complain if prices don't reduce?

Yes, through consumer helplines and the Ingram portal.

15. What's new for businesses?

Simplified annual returns and fewer compliance details required.

16. What is GSTAT?

The new GST Appellate Tribunal where appeals can be filed from Sept 2025, hearings from Dec 2025.

17. Are old stocks affected?

No need to change stickers for goods made before 22 Sept 2025.

18. How will this affect government revenue?

Estimated shortfall of ₹48,000 crore, but government expects higher demand to cover it.

19. Is renewable energy cheaper now?

Yes, GST on renewable energy equipment cut to 5%.

20. Where can I check the official list of rate changes?

On pib.gov.in and gstcouncil.gov.in.