GST rate revision 2025: The Indian Government has rolled out a major GST reform effective 22nd September 2025. Popularly known as GST 2.0, the move aims to simplify the tax structure, reduce the burden on essentials, rationalise slabs, and ensure higher revenue from luxury and sin goods.
Rate Structure: Old vs New
| Category | Old Rate Slabs | New Rate Slabs |
|---|---|---|
| Main Slabs for most goods/services | 5 %, 12 %, 18 %, 28 % | Mostly 5 % (essentials/merit goods) and 18 % (standard) |
| Luxury / “sin” / demerit goods | 28 % (plus cess) | New 40 % slab introduced |
| Nil / Zero GST | Limited coverage | Expanded to cover more essentials, health & education supplies |
Key Goods & Services: Old vs New Rate
| Product / Service | Old GST Rate | New GST Rate | Implication / Price Effect |
|---|---|---|---|
| Staple Foods (Paneer, Chena, Chapati/Roti, Paratha, Khakra, Pizza Bread) | 5 % to 18 % | 0 % (Nil) | Household savings on everyday food items. |
| Dairy Products (Ghee, Butter, Cheese) | 12 %–18 % | 5 % | Cheaper dairy products; demand likely to rise. |
| Personal Care Items (Shampoo, Hair Oil, Toothpaste, Soap) | 18 % | 5 % | Reduced cost of daily-use products. |
| Baby & Clinical Items (Diapers, Feeding Bottles) | 12 %–18 % | 5 % | Relief for families with young children. |
| Electronics & Appliances (ACs, TVs, Dishwashers) | 28 % | 18 % | High-value purchases become more affordable. |
| Automobiles (Bikes up to 350cc, small cars, auto parts) | Mostly 28 % | 18 % (standard vehicles); 40 % (luxury) | Cheaper bikes/cars for middle class, costlier luxury cars. |
| Insurance (Life & Health) | 18 % | 0 % (Nil) | Premiums become cheaper. |
| Stationery & Education Supplies | 12 %–18 % | Nil or very low | Direct benefit to students and parents. |
| Hotel Rooms (≤ ₹7,500/night) | 12 %–18 % | 5 % | More affordable tourism & domestic travel. |
| Luxury / Sin Goods (Aerated Drinks, Pan Masala, Luxury Cars, Superbikes) | 28 % + cess | 40 % | Higher prices; demand expected to fall. |
Special Impact on Aam Aadmi (Local Citizen)
For the common household, GST 2.0 directly impacts day-to-day expenses:
- Groceries & Food: Chapatis, paneer, and packaged breads now fall under 0 % GST, making everyday meals more affordable.
- Daily Essentials: Shampoo, soaps, toothpaste, and oils shifting from 18 % to 5 % will cut monthly grocery bills significantly.
- Childcare Costs: Baby diapers and feeding bottles are now taxed at just 5 %, easing the financial pressure on young families.
- Healthcare & Insurance: With Nil GST on health and life insurance, households can now get cheaper medical coverage.
- School Expenses: Stationery and notebooks shifting to 0 % will reduce education costs.
👉 Practical Example: A family spending ₹10,000/month on groceries, toiletries, and essentials could save anywhere from ₹800 to ₹1,200 per month after GST 2.0.
Special Impact on Salaried Employees
Salaried employees — the backbone of the middle class — feel the GST changes both directly (in daily life) and indirectly (through their financial planning):
- Lower Living Costs: Reduced GST on essentials frees up disposable income, increasing savings potential.
- Insurance Premiums: A big win — GST removal on life and health insurance makes policies cheaper, encouraging more salaried workers to buy adequate coverage.
- Electronics & Gadgets: With laptops, TVs, and appliances moving to 18 %, buying work-from-home or personal gadgets becomes easier on the pocket.
- Travel & Stay: Reduced GST on hotel rooms makes both business and leisure trips more affordable.
- Vehicles: Two-wheelers and entry-level cars become cheaper (18 %), which directly benefits salaried individuals planning to upgrade or buy new vehicles.
👉 Practical Example: A salaried employee with ₹50,000 monthly income could save ₹5,000–₹10,000 annually due to cheaper insurance premiums, lower FMCG costs, and reduced expenses on electronics and travel.
Practical Effects
- Lower Household Costs — Essentials, FMCG, insurance, and stationery all become cheaper.
- Simplified Compliance — Fewer slabs mean easier GST billing and returns.
- Revised MRPs — Companies will update product prices, packaging, and invoices.
- Inflation Control — Price relief on essentials reduces inflation pressure.
- Revenue Redistribution — Relief on basics, but higher GST on luxury/sin goods ensures balanced collections.
Challenges Ahead
- Delayed Price Cuts by companies.
- Classification Disputes (what counts as luxury vs essential).
- Awareness Gap — citizens must stay informed about revised rates.
- Revenue Balance for states to adjust in short-term.
Conclusion
GST 2.0 is one of the most significant tax reforms since GST was introduced in India. For the Aam Aadmi, it means lower monthly expenses on food, essentials, and insurance. For the salaried employee, it boosts savings, reduces cost of living, and makes financial planning easier. On the flip side, luxury and sin goods have become costlier — ensuring those who can afford them contribute more to the tax pool.
This reform is not just about taxation; it’s about reshaping the everyday financial life of Indian citizens.
âť“ Frequently Asked Questions (FAQs) on GST Rate Revision 2025
Q1. What is the effective date of the new GST rate revision in 2025?
The revised GST rates are applicable from 22nd September 2025 onwards.
Q2. Which products are most affected by the GST revision 2025?
Items like mobile phones, packaged food, household appliances, EVs, and insurance premiums are among the most affected.
Q3. What was the old GST rate on mobile phones and what is the new rate?
Earlier 12%, now revised to 18%, making phones more expensive.
Q4. How does the GST change affect electric vehicles (EVs)?
GST on EVs is reduced from 5% to 3%, making them more affordable and encouraging eco-friendly mobility.
Q5. Has GST on household appliances changed?
Yes, refrigerators, washing machines, and ACs have been revised from 28% to 18%, reducing overall prices.
Q6. How will the GST revision impact monthly grocery bills?
With packaged food and essentials like biscuits, namkeens, and ready-to-eat items taxed at lower rates, household grocery bills will see slight relief.
Q7. What’s the effect of GST changes on salaried employees?
Higher GST on mobile phones, OTT subscriptions, and insurance premiums increases expenses; however, relief on appliances and EVs balances the impact.
Q8. Are healthcare services affected by the new GST revision?
Yes, diagnostic tests and certain medicines see GST reduced from 12% to 5%, lowering medical bills.
Q9. How does GST revision affect education services?
Online learning platforms now attract 12% GST instead of 18%, making education more affordable.
Q10. Will GST changes impact my internet and telecom bills?
Yes, telecom services remain at 18% GST, but OTT platforms are slightly cheaper now, shifting entertainment costs.
Q11. How does the GST cut on appliances benefit Aam Aadmi?
A refrigerator costing ₹30,000 earlier will now be cheaper by ₹2,500–₹3,000 due to the lower 18% GST slab.
Q12. Are insurance premiums affected by the GST revision?
Yes, life and health insurance premiums will now be taxed at 12% instead of 18%, lowering yearly premium costs.
Q13. How does the GST rate revision affect salaried employees’ savings?
Savings will improve slightly due to reduced insurance premiums and lower costs on home appliances.
Q14. Is there any GST relief on public transport?
Yes, GST exemption continues on metro and public bus services, ensuring no additional burden on citizens.
Q15. How are dining and restaurants impacted?
Restaurant services remain unchanged at 5% (without ITC), so no major impact.
Q16. Has GST on gold and jewelry changed?
No, gold continues under 3% GST, unchanged from before.
Q17. What’s the impact on salaried employees using ride-hailing services?
Ride-hailing apps remain at 5% GST, so cab fares remain the same.
Q18. Is there a GST revision for laptops and IT equipment?
Yes, laptops are revised from 18% to 12%, encouraging digital adoption.
Q19. How will GST changes affect start-ups and small businesses?
Reduced GST on IT equipment, software, and digital tools lowers costs, supporting business growth.
Q20. Are cinema tickets affected by GST changes?
Yes, GST on cinema tickets above â‚ą200 reduced from 18% to 12%, making entertainment cheaper.
Q21. What is the impact of GST changes on the housing sector?
Affordable housing projects continue at 1% GST, but construction materials like cement remain at 28%, keeping property prices high.
Q22. Does the GST revision affect salaried employees’ tax filing?
No, GST changes affect indirect taxes on spending, not income tax filing.
Q23. Which daily-use household items became cheaper after GST revision?
Fans, mixers, geysers, and small kitchen appliances now fall under 12%–18% slab instead of 28%.
Q24. Will GST revisions affect personal loans or credit card charges?
Yes, GST on banking services like processing fees remains at 18%, so no relief there.
Q25. Overall, does the GST revision favor common citizens or increase burden?
It’s a mixed impact: essentials and insurance got cheaper, but gadgets like smartphones became costlier, balancing the effect for Aam Aadmi and salaried employees.
