The Indian GST system is undergoing one of its biggest overhauls since its launch, bringing relief to common households, businesses, and industries alike. Starting September 22, 2025, everyday essentials like food items, toiletries, healthcare products, and even insurance will become cheaper, while luxury and sin goods will attract higher taxes. This reform is designed to boost consumption, reduce the burden on the middle class, and simplify the tax structure with just two primary slabs—5% and 18%. Whether you are a shopper, a business owner, or simply curious about what’s changing, here’s everything you need to know about what gets cheaper and what gets costlier under the new GST rates.
Essentials & Daily-Use Items
- Daily necessities such as hair oil, shampoo, soap, toothpaste, toothbrushes, shaving creams — now at 5%, down from 18% .
- Food & dairy products like butter, ghee, cheese, packaged snacks (namkeens), dried fruits and nuts, condensed milk — now at 5% (previously at 12–18%) .
- Fresh and staple items, plus education supplies like maps, notebooks, pencils, erasers — set to 0% (GST-exempt) .
Healthcare, Insurance & Education Supplies
- Individual health and life insurance policies are now exempt from GST altogether .
- Healthcare products (e.g., thermometers, medical oxygen, diagnostic kits, glucometers, corrective spectacles) are reduced to 5% .
Agriculture, Equipment & Utilities
- Tractors, tractor parts, agricultural machinery, drip-irrigation systems — now at 5% (down from 12–18%) .
- Cement — reduced to 18% (from 28%) which is a significant cost saving .
- Televisions, air conditioners, washing machines, other appliances — now taxed at 18% (down from 28%) .
Automobiles & Transport
- Small cars (e.g., petrol <1200 cc, diesel <1500 cc) and motorcycles up to 350 cc — now taxed at 18%, down from 28% .
- Electric vehicles continue at 5%, encouraging greener choices .
More Relief Across the Board
- Cement — from 28% to 18%, reducing building costs .
- Insurance services (third-party goods carriage) — now at 5% with input tax credit (previously 12%) .
- Hotel tariffs (rooms up to ₹7,500) and economy flight tickets — now at 5% GST .
What’s Getting Costlier
- Luxury & sin goods such as:
- Tobacco, cigarettes, gutka, pan masala, carbonated and caffeinated drinks — now at 40% .
- High-end cars, yachts, gambling services, casinos, raceclubs — now at 40% .
| Category | Tax Rate (New) | Was Previously | You Save/ Pay More |
| Daily essentials | 5%|0% | 12 -18% | Significant savings |
| Packaged snacks, dairy | 5% | 12-18% | Lower prices |
| Insurance (life/health) | 0% | 18% | Full tax relief |
| Appliances (AC, TVs, etc.) | 18% | 28% | Noticeable drop |
| Small vehicles (cars, bikes) | 18% | 28% | Cheaper transport |
| Agricultural equipment, cement | 5-18% | 12-28% | Cost reduction on essentials |
| Luxury & sin goods | 40% | 28% (+ cess) | Much costlier |
Effective Date
These revised GST rates come into effect on September 22, 2025.