GST Council Meeting New GST Rates 2025: Full List of Changes

Table of Contents

• Overview
• Implementation timeline
• “Simple Tax” structure (5% / 18% / 40% / NIL)
• Common-man items — 12%→5% & 18%→5%
• Packaged food & dairy — 12/18%→5% & 5%→NIL
• Healthcare & medicines — 12%→5%, 18%→5%, NIL
• Agriculture & fertilizers — 12/18%→5%
• Automotive — 28%→18%, uniform 18% on parts
• Consumer electronics — 28%→18%
• Textiles & inverted duty correction — 18%→5%, 12%→5%
• Paper & education supplies — 12%→NIL/5%
• Core services — selected 12%→5%, some to 18%
• Hospitality & well-being — 12%→5% / 18%→5%
• Insurance — 18%→Exempt
• De-merit category — 28%→40%
• Trade facilitation & law changes
• What this means for you

Overview

At its 56th meeting, the GST Council announced a sweeping rate rationalisation focused on the common citizen, labour-intensive industries, agriculture and health. The headline moves include exemptions for individual life and health insurance, a simpler two-rate structure, and large rate cuts across everyday goods.

Implementation timeline

• Service rate changes take effect from 22 September 2025.
• Most goods also shift from 22 September 2025.
• Pan masala and tobacco products continue at existing rates/cess until compensation-cess obligations are cleared; the Finance Minister will decide the switch-over date for those items.

“Simple Tax” structure (5% / 18% / 40% / NIL)

• Merit Rate: 5%
• Standard Rate: 18%
• Special De-merit Rate: 40% (select goods & services)
• NIL: For specified essentials, lifesaving drugs, and some food items

This replaces the earlier four-tier structure.

Common-man items — 12%→5% & 18%→5%

Big basket of daily-use goods moves down: tooth powder, candles, feeding bottles, umbrellas, tableware/kitchenware, bicycles & parts, bamboo/cane furniture, combs, baby diapers, etc. (mostly 12%→5%).
Several toiletries drop 18%→5%: shampoo, hair oil, toothpaste, toothbrushes, toilet soap, talcum/face powder, shaving items.

Packaged food & dairy — 12/18%→5% & 5%→NIL

• Packaged namkeens, sauces, pasta, instant noodles, chocolates, coffee, preserved meat, cornflakes, butter, ghee → 5% (from 12% or 18%).
• UHT milk, pre-packaged paneer/chhena, and all Indian breads (roti, chapati, paratha, parotta, etc.) → NIL (from 5%).

Healthcare & medicines — 12%→5%, 18%→5%, NIL

• 33 lifesaving drugs: 12%→NIL; 3 lifesaving drugs: 5%→NIL.
• All other drugs/medicines: 12%→5%.
• Medical devices: many items 18%→5%.
• Diagnostic kits, reagents, gauze, bandages, glucometers: 12%→5%.

Agriculture & fertilizers — 12/18%→5%

• Tractors, soil-preparation, cultivation and harvesting machinery, composters, mowers: 12%→5%.
• Fertiliser intermediates such as sulphuric acid, nitric acid, ammonia corrected 18%→5%.

Automotive — 28%→18%, uniform 18% on parts

• Small cars & motorcycles ≤350cc: 28%→18%.
• Buses, trucks, ambulances: 28%→18%.
• Three-wheelers: 28%→18%.
• All auto parts taxed at a uniform 18%.

Consumer electronics — 28%→18%

• Air-conditioners, dishwashers, TVs (all sizes, including ≤32”): 28%→18%.
  This brings TVs entirely into the 18% slab.

Textiles & inverted duty correction — 18%→5%, 12%→5%

• Manmade fibre: 18%→5%.
• Manmade yarn: 12%→5%.
  Value-linked corrections for apparel and quilted products are also included.

Paper & education supplies — 12%→NIL/5%

• Uncoated paper/board for notebooks: 12%→NIL.
• Education items like exercise/graph/lab notebooks, pencils, crayons, sharpeners, maps, globes shift to NIL or 5% depending on the item.

Core services — selected 12%→5%, some to 18%

• Down to 5%: admission to films ≤₹100, treatment of effluents, biomedical waste treatment (all from 12%).
• Transport: entries rationalised across 5% and 18% (GTA, multimodal, renting with operator, air travel—non-economy up to 18%).
• Up to 18%: oil & gas exploration services and some works contracts (from 12%).

Hospitality & well-being — 12%→5% / 18%→5%

• Hotel accommodation ≤₹7,500 per day: 12%→5% (without ITC).
• Beauty & physical well-being services (gyms, salons, barbers, yoga centres): 18%→5% (without ITC).

Insurance — 18%→Exempt

• All individual life insurance (term, ULIP, endowment) and all individual health insurance (including family floater & senior citizen policies) are now exempt from GST.
• Their reinsurance is also exempt.

De-merit category — 28%→40%

• A new 40% rate applies to casinos, race clubs, betting, gambling, horse racing, lottery, online money gaming, and certain leasing without operator services.

Trade facilitation & law changes

• Provisional refunds @ 90% extended to IDS; operational from 1 November 2025.
• Simplified registration for small/low-risk businesses (auto-approval in 3 days) from 1 November 2025.
• Place of supply for intermediaries shifts to recipient’s location by omitting IGST 13(8)(b), aiding service exports.
• RSP-based valuation for pan masala, gutkha, cigarettes, tobacco under GST to curb undervaluation.
• GSTAT to accept appeals before end-September and begin hearings before December 2025.

What this means for you

Everyday costs (toiletries, kitchenware, bicycles), packaged foods, hotel stays, salon/gym visits, medical devices, and key farm inputs should see price relief. Insuring your family becomes cheaper with full GST exemption on individual health and life covers. High-risk gaming and betting face a steeper 40% levy. Businesses get predictability via a leaner 5%/18% structure, IDS corrections, and faster refunds — with specific dates and notifications to make it law.

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Source: Press Information Bureau press release on recommendations of the 56th GST Council meeting (03 Sep 2025).

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