New GST rates: The Goods and Services Tax (GST) Council is changing the way taxes work in India starting Monday, 22 September 2025. The four-rate system will go away, and a new two-tier system will take its place. Most goods will now be taxed at either 5% or 18%, depending on what they are. The government also introduced a special 40% tax for certain items, replacing the earlier Compensation Cess that applied to some products.
This reform aims to simplify GST, but some products will become more expensive while others get cheaper. Shoppers should know which items fall into which tax bracket before buying.
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Items that will get Cheaper
Under GST 2.0, many daily use items will cost less. Things like UHT milk, pre-packaged paneer, and chena will have lower taxes. All kinds of bread, like chapati, roti, paratha, parotta, khakhra, and even pizza bread, will also get cheaper.
Medicines and Health Products
Important medicines and therapies, including 33 drugs for cancer and rare diseases like Agalsidase Beta, Imiglucerase, Eptacog alfa, Daratumumab, Onasemnogene abeparvovec, and Risdiplam, will now have nil GST. Many drugs that were taxed 12% before will not have any tax now, making them more affordable for patients.
School and Office Stationery
GST 2.0 lowers prices on stationery too. Items like erasers, pencils, sharpeners, crayons, chalk, charcoals, notebooks, graph books, maps, atlases, and globes will cost less, helping students and offices save money.
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Food, Toiletries, and Consumer Goods
Many everyday consumer items will get cheaper. Butter, biscuits, namkeen, jams, ketchup, juices, dry fruits, ghee, ice cream, pastries, and sausages will have lower taxes. Toiletries like soaps, shampoos, hair oil, face creams, and shaving cream are also cheaper now.
Some kitchen appliances and electronics, like ACs, TVs, washing machines, and dishwashers, have moved from 28% GST to 18%. Medical devices like diagnostic kits and glucometers now attract only 5% GST. Cement for building houses is also cheaper, down from 28% to 18%.
Services Become More Affordable
GST 2.0 makes some services cheaper too. Haircuts, salon services, yoga centres, gyms, and health clubs will now have lower GST rates, helping people save on personal care and fitness.
Items that will get more Expensive
Luxury Vehicles
Under the new rules, luxury and “sin” goods will see much higher taxes. Cigarettes and pan masala will now be taxed at 40%. Big luxury cars with engine capacity over 1,200cc and longer than four meters will also come under this 40% rate. This includes SUVs and MPVs that earlier had 28% GST plus a 22% Cess. Two-wheelers above 350cc will also cost more under the new system.
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Soft Drinks Get Costlier
Soft drinks and other sugary beverages like Coca-Cola, Pepsi, Mountain Dew, and Fanta will also get more expensive. The GST on aerated drinks, carbonated fruit drinks, and fruit juices is now 40%, up from 28%.
