Tax Overhaul: Nirmala Sitharaman Announces Lowered GST Rates for Various Products - Examine the Complete Catalogue Here
In a significant move, Finance Minister Nirmala Sitharaman announced GST reforms that are set to impact various everyday items and services. The new rates, effective from 22nd September 2025, aim to make a multitude of goods and services more affordable for consumers.
One of the most notable changes is the reduction of GST rates for a wide range of consumer goods. Namkeen, bhujiya, sauces, instant noodles, coffee, ghee, butter, chocolates, and many more will now be taxed at 5%, a significant decrease from the previous rates of 12% or 18%.
On the other hand, the GST rates for certain durable goods have been increased. Air conditioners, televisions over 32 inches, dishwashing machines, monitors, and projectors will now be taxed at 18%, an increase from the previous 5%.
The transportation sector also sees some changes, with 3-wheelers now being taxed at 18%, a decrease from the previous 28%. Small cars, motorcycles less than 350 cc, and motor vehicles for transport of goods have had their GST rate reduced from 28% to 12%. Similarly, the GST rate on buses, trucks, and ambulances will be reduced from 28% to 18%.
The new GST rates will also affect various consumer goods, including soap, medium and large cars, and small gasoline and diesel vehicles, making them cheaper from September 2025. This consolidation of rates primarily into 5% and 18% eliminates the previous 28% rate, thus reducing effective taxes on these items.
In the health and wellness sector, life saving drugs and medicines will attract nil GST rate, a reduction from 12%. Ultra high temperature milk, paneer, and various Indian breads like roti, chapati, and paratha will also attract nil GST.
The GST rate on individual life insurance and health insurance has been reduced to nil. This move is expected to provide significant relief to policyholders.
In the textile industry, manmade fibre GST has been reduced from 18% to 5%, and for manmade yarn it has been brought down from 12% to 5%. Agricultural, horticultural, or forestry machines for soil preparation, cultivation, harvesting, threshing, specified bio-pesticides, and natural menthol have been moved from the 12% GST slab to 5%.
The GST rate on cement has been reduced from 28% to 18%. A uniform 18% GST rate will be applicable on all auto parts.
However, sin goods such as pan masala, cigarette, gutkha, chewing tobacco like zarda, aerated water containing added sugar, carbonated beverages, non-alcoholic beverages, and unmanufactured tobacco will attract a special GST rate of 40%.
The transition for tobacco-related products will be decided by the Union Finance Minister and the Chairperson of the GST Council at a later date, as these products will continue at their current rates until the loan and interest payment obligations under the compensation cess account are completely discharged.
These GST reforms are expected to bring about a significant change in the pricing of various goods and services, making them more affordable for consumers and stimulating economic growth.
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