GST Overhaul 2025: New GST Rules From September 22 — Full Guide
New GST Rules From September 22 : The GST Council has announced one of the biggest reforms since the introduction of the Goods and Services Tax in India. Starting September 22, 2025, the country will switch to a simpler GST structure with just two main slabs — 5% and 18%, plus a special 40% slab for luxury and sin goods.
Everyday essentials like milk, paneer, roti, and pizza bread are exempted. Insurance policies are now tax-free, and prices of construction materials, household items, and farming equipment will come down.
This guide explains all the important changes in clear and simple language.
When Will the New GST Rates Start?
The new GST rates will be effective from September 22, 2025, across India.
Exception: Tobacco products and gutkha will continue under the old GST rates until further notice.
New GST Slabs at a Glance
From September 22, GST will follow three categories:
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5% Slab → Essential goods, basic services, agriculture items
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18% Slab → Consumer goods, electronics, travel, telecom, banking, etc.
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40% Slab → Luxury and sin goods such as high-end cars, SUVs, casinos, betting, aerated drinks, and alcohol substitutes
Essential Food Items — Tax-Free
Good news for households! Everyday food items remain GST-exempt:
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Milk and paneer
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Roti, chapatti, and pizza bread
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Unbranded staples like rice and wheat
Insurance Premiums Are Now GST-Free
All life and health insurance policies are completely tax-free from September 22. This includes:
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Term insurance
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ULIPs
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Family health policies
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Senior citizen plans
Medicines and Healthcare Under GST
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Medicines → Now taxed at 5%
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Medical devices → Reduced to 5% to make healthcare cheaper
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Hospital services → Basic hospital services stay exempt, but certain value-added services may attract 18% GST
GST on Vehicles and Automobiles
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Small cars → Up to 1200cc petrol/LPG/CNG or 1500cc diesel → 18% GST
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Luxury cars & SUVs → 40% GST
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Motorcycles → Up to 350cc → 18%, above 350cc → 40%
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Buses and trucks → 18% GST (reduced from earlier rates)
Farming and Agricultural Equipment
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Agricultural machinery → 5% GST on items like sprinklers, drip systems, and harvesters
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Tractors → Not exempt, but taxed at lower rates to maintain input tax credit
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Fertilizers → 5% GST
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Seeds → Exempt from GST
GST on Common Household Items
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Soaps, shampoos, talcum powder → 5%
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Toothpaste, toothbrushes, dental floss → 5%
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Sanitary napkins → Exempt
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Packaged snacks, biscuits, chocolates → 18%
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Edible oils → 5%
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Bottled drinking water → 18%
GST on Electronics and Technology
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TVs, ACs, dishwashers, and refrigerators → 18%
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Mobile bills and internet services → 18%
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Software, OTT subscriptions, and cloud services → 18%
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IT consultancy and digital services → 18%
Hotels, Travel, and Entertainment
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Hotels → Rooms up to ₹7,500/night → 5%, above ₹7,500 → 18%
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Air travel → Economy class 5%, business class 18%
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Rail and bus fares → 5%
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Tour packages → 5% GST
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Cinema tickets → Up to ₹250 → 5%, above ₹250 → 18%
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Casinos, betting, and IPL tickets → 40% GST
GST on E-commerce and Digital Platforms
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Online products and services → Taxed at the same rates as offline
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Digital streaming, gaming, and subscriptions → 18%
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E-commerce platforms must collect and pay GST on behalf of sellers
Real Estate and Construction
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Under-construction flats → 5% GST (no ITC)
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Affordable housing projects → Continue at concessional rates
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Ready-to-move flats and resale properties → Outside GST
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Stamp duty and registration fees → Unchanged
Energy, Fuel, and Utilities
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Domestic LPG → 5% GST
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Commercial LPG → 18% GST
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Electricity → Exempt
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Renewable energy equipment → 5% GST
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Petrol, diesel, and natural gas → Not under GST (continue under VAT & excise)
Key Highlights of GST Overhaul 2025
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Simplified two-slab GST structure: 5% & 18%
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Luxury and sin goods taxed at 40%
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Insurance premiums are completely tax-free
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Everyday essentials remain GST-exempt
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Medicines and medical devices become cheaper
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Digital services taxed uniformly at 18%
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Travel, hotels, and entertainment see reduced rates in many cases
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GST Overhaul 2025: New GST Rules & Rates Effective September 22
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From September 22, 2025, India adopts a simplified GST structure with 5%, 18%, and 40% slabs. Get the full list of new GST rates, exempted items, and their impact on food, travel, insurance, real estate, and e-commerce.
