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GST Rate Update – Effective from 22nd September 2025
The Government of India has announced a major GST Rate Update effective from 22nd September 2025.
These changes are aimed at making essential goods more affordable while restructuring taxes on luxury items and services.
Here’s a detailed breakdown of the new GST rates compared to the old ones.
Key Changes in GST Rates
| Item / Category | Old GST Rate(s) | New Rate (from 22nd Sept 2025) |
|---|---|---|
| Daily essentials (soap, shampoo, toothpaste, etc.) | ~18% | 5% |
| Butter, ghee, cheese, dairy spreads | ~12-18% | 5% |
| Pre-packaged paneer, UHT milk, breads | ~5-18% | 0% (nil) or reduced |
| Small cars, consumer durables (TV, AC, fridge) | 28% | 18% |
| Luxury goods (high-end cars, aerated drinks, etc.) | 28% + cess | 40% slab (replacing GST + cess) |
| Hotels with rooms under ₹7,500 per night | 12% with ITC | 5% without ITC |
| Individual health / life insurance | 18% | Exempt / Zero GST |
Impact of the GST Rate Update
- Relief for households: Lower GST on essentials and dairy products makes everyday items cheaper.
- Encouragement for FMCG sector: Reduced rates will increase demand for packaged goods.
- Affordable insurance: Exemption of GST on health and life insurance will encourage more individuals to secure their future.
- Tourism benefit: Lower GST on hotels will attract domestic and international travelers.
- Luxury tax restructuring: High-end goods will now attract a clear 40% slab, streamlining GST and cess collections.
Why This Update Matters?
These changes in GST rates from 22nd September 2025 mark a significant step toward
simplifying the tax structure in India. By making essential goods cheaper while maintaining higher tax slabs for luxury
products, the government aims to balance affordability and revenue collection.
