GST Rates in 2025 - List of Goods and Services Tax Rates Slabs

Introduction

In a major overhaul, the Goods and Services Tax (GST) rate structure in India has been revamped from 1 July 2017 with new slabs effective 22 September 2025, following the 56th meeting of the GST Council. The objective: simplify multiple tax slabs, make goods and services more affordable for consumers, and ease compliance for businesses. Under the reform, the key tax rate buckets are now 0 %, 5 %, 18 % and a special 40 % rate for luxury/sin goods.

The Revised GST Rate Structure

What changed?

• The GST Council approved the rationalisation of slabs in its meeting on 3 September 2025, with changes coming into effect from 22 September 2025.
• The earlier main slabs (5 %, 12 %, 18 %, 28 %) have been consolidated. Many items in the 12 % and 28 % slabs have now moved to 5 % or 18 %.
• A new higher slab of 40 % has been introduced for “sin goods” and high‑luxury items (which earlier attracted 28 % + cess) to maintain revenue neutrality.
• While 0 % (nil rated) continues for many essential goods and services.

Core Slabs at a Glance

Slab

Typical Use Case

0%

Essential and exempt goods/services (raw food, basic health/education)

5%

Basic necessities, consumer goods, priority sectors

18%

Standard goods & services, most consumer durables, vehicles (below luxury grade)

40%

“Sin” goods and luxury/high‑end items (tobacco, pan masala, high CC vehicles, certain beverages)

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Item‑Wise Highlights: What Moves to Which Slab

0 % Slab

• Many unbranded/unpackaged food items, some medical supplies, and life‑saving drugs have moved to 0 % to benefit consumers.
• Example: UHT milk, basic bread/rotis, and certain agri‑inputs have been much cheaper post‑revision.

5 % Slab

• Large breadth of goods now taxed at 5%: consumer goods, personal care products, home utensils, certain electronics previously at 12/18/28 %.
• Select services (basic personal services) are likely at 5% subject to classification.

18 % Slab

• Becomes the standard “normal” rate for many goods & services outside essentials and luxury items.
• Items like consumer electronics, small cars/two‑wheelers, and many service categories. Example: Small cars & bikes moved from 28% to 18%.

40 % Slab

• “Sin/luxury” rate: items such as pan masala, cigarettes, gutkha, certain aerated sugary drinks, luxury vehicles, private aircraft, yachts, etc.
• It consolidates the earlier 28% + cess regime into a single 40% slab for simplification.

Key Implications for Businesses & Consumers

• Consumers: Many everyday items will cost less — rate drops from 12%/18% to 5% or 0% means lower retail prices. For example, personal care items, packaged foods, and electronics.
• Businesses: Must review product classification, update pricing & billing systems, re‑train GST invoicing, and adjust input tax credit flows under the new structure.
• Luxury/“sin” market: Higher rate means cost remains high for certain goods, revenue side protected.
• Compliance: Reduced complexity in slabs helps with audits, inward‑outward supply classification, and tariff code assignment.
• Input tax credit & supply chain: With revised slabs, inverted duty structures reduce; manufacturers/retailers need to reassess cost structures.
• Service sector: Many service categories now likely fall within 18% (standard) or 5% (essential/basic) — service providers should verify their SAC codes.

Table: Major Goods/Services – Slab Transfers from Old to New

Category

Old Rate(s)

New Rate

Many packaged/processed food items

12% or 18%

5%

Consumer appliances & electronics

28%

18%

Personal care/toiletries

18%

5%

Small cars / two‑wheelers <350cc

28%

18%

Tobacco, pan‑masala, gutkha

28% + cess

40%

Health & life insurance

12%

Exempt / lower rate

How to Check Your Item’s GST Rate

1. Identify the HSN (Harmonized System of Nomenclature) or SAC (Service Accounting Code) for the good/service.
2. Refer to the latest notifications issued by the Central Board of Indirect Taxes & Customs (CBIC) or GST Council.
3. Check whether your item falls under the essential/basic category (0%/5%) or the standard/luxury (18%/40%).
4. Update your billing/invoicing system to reflect the rate, ensure the correct tax amount, and mention the rate in the invoice.
5. Maintain compliance with input tax credit rules, especially if the input rate or credit eligibility changes due to slab revision.

Conclusion

The GST reform of 2025 marks a paradigm shift in India’s indirect tax regime. By simplifying the GST slab structure and bringing most goods and services into three or four clear buckets (0%, 5%, 18% and 40%), the reform is designed to reduce consumer costs, ease business compliance, and modernise tax administration.