An Overview of India’s Most Recent GST Rate Cuts.

An Overview of India’s Most Recent GST Rate Cuts
With effect from September 22, 2025 (which coincided with Navratri), India’s Goods and Services Tax (GST) system underwent a significant redesign as of September 23, 2025. The structure is reduced from a multi-tier system (0%, 5%, 12%, 18%, 28% + cess) to essentially two wide slabs under this “GST 2.0” reform: 5% for necessities and the majority of common commodities and 18% for typical consumer goods and services.

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India has recently undergone a major GST reform, simplifying the tax structure from four slabs (5%, 12%, 18%, and 28%) to a new two-rate system of 5% and 18%. A new, higher 40% rate has also been introduced for luxury and “sin” goods. This change has resulted in a GST cut on a wide range of products.

Here is a summary of the key changes:

GST Cut to 5% or Nil:

• Daily Essentials: Soaps, shampoos, toothpaste, bicycles, and household tableware have moved to the 5% slab from higher rates.
  
• Packaged Food Items: Many packaged foods like namkeens, biscuits, pasta, chocolates, coffee, and condensed milk have seen their GST reduced from 12% or 18% to 5%.
  
• Dairy Products: Ghee, butter, and cheese are now taxed at 5%, while Ultra-High Temperature (UHT) milk and pre-packaged paneer are now exempt from GST (Nil rate).
  
• Medical & Health: Most medicines and diagnostic kits have seen a GST cut from 12% to 5%. A select list of life-saving drugs is now completely tax-free.
  
• Services: Services at salons, gyms, and yoga centres have been reduced from 18% to 5%.
  
• Education: School items like pencils, erasers, and notebooks are now GST-free.
  

GST Cut to 18%:

• Consumer Durables: TVs (over 32 inches), air conditioners, and dishwashers have been moved from the 28% slab to 18%.
  
• Automobiles: Two-wheelers with engines up to 350 cc and small cars have had their GST reduced from 28% to 18%. Auto parts and cement have also seen their GST cut to 18%.
  

The new GST rates are designed to make essential items more affordable for the common person while maintaining higher taxes on luxury and non-essential goods.