GST Council’s Historic Decision: Only Two GST Slabs in India
The news that Indians have been waiting for has finally arrived. On 3rd September (late night), the GST Council approved a major reform in India’s indirect tax structure. The Council announced that only two GST slabs will now remain – 5% and 18%.
This means that the 12% and 28% slabs have been completely removed. The decision was taken in the 56th meeting of the GST Council, chaired by Finance Minister Nirmala Sitharaman on Wednesday. The new GST rate structure will come into effect from 22nd September 2025.
Key Highlights
Simplification of Slabs: Only two main slabs remain – 5% and 18%
Introduction of a New Slab: A 40% GST slab created for sin goods & super-luxury items
12% and 28% slabs abolished: Goods from these categories have been shifted to either 5% or 18%, except those classified under the new 40% slab
1. Save Big on Daily Essentials
| Items Earlier GST New GST | ||
| Hair Oil, Shampoo, Toothpaste, Toilet Soap, Toothbrushes, Shaving Cream | 18% | 5% |
| Butter, Ghee, Cheese & Dairy Spreads | 12% | 5% |
| Pre-packaged Namkeens, Bhujia & Mixtures | 12% | 5% |
| Utensils | 12% | 5% |
| Feeding Bottles, Napkins for Babies & Clinical Diapers | 12% | 5% |
| Sewing Machines & Parts | 12% | 5% |
2. Uplifting Farmers & Agriculture
| Items Earlier GST New GST | ||
| Tractor Tyres & Parts | 18% | 5% |
| Tractors | 12% | 5% |
| Specified Bio-Pesticides, Micro-Nutrients | 12% | 5% |
| Drip Irrigation Systems & Sprinklers | 12% | 5% |
| Agricultural, Horticultural & Forestry Machines (Soil Prep, Cultivation, Harvesting & Threshing) | 12% | 5% |
3. Relief in Healthcare Sector
| Items Earlier GST New GST | ||
| Individual Health & Life Insurance | 18% | Nil |
| Thermometers | 18% | 5% |
| Medical Grade Oxygen | 12% | 5% |
| Diagnostic Kits & Reagents | 12% | 5% |
| Glucometers & Test Strips | 12% | 5% |
| Corrective Spectacles | 12% | 5% |
4. Affordable Education
| Items Earlier GST New GST | ||
| Maps, Charts & Globes | 12% | Nil |
| Pencils, Sharpeners, Crayons & Pastels | 12% | Nil |
| Exercise Books & Notebooks | 12% | Nil |
| Erasers | 5% | Nil |
5. Automobiles Made Affordable
| Items Earlier GST New GST | ||
| Petrol & LPG/CNG Cars (≤1200 cc & ≤4000 mm) | 28% | 18% |
| Diesel Cars (≤1500 cc & ≤4000 mm) | 28% | 18% |
| 3-Wheeled Vehicles | 28% | 18% |
| Motorcycles (350 cc & below) | 28% | 18% |
| Motor Vehicles for Transport of Goods | 28% | 18% |
6. Save on Electronic Appliances
| Items Earlier GST New GST | ||
| Air Conditioners | 28% | 18% |
| Televisions (above 32”) including LED & LCD TVs | 28% | 18% |
| Monitors & Projectors | 28% | 18% |
| Dishwashing Machines | 28% | 18% |
What Gets Costlier Under the New 40% GST Slab?
The GST Council has introduced a 40% tax rate for selected sin goods and super-luxury items.
1. Tobacco Products
- Items: Pan masala, gutkha, cigarettes, and related products
- Status: Continue under GST + Compensation Cess until loans are cleared
- Future: 40% GST slab framework ready, expected by 2028
2. Carbonated Drinks & Luxury Cars
- Carbonated/sugary beverages flagged for the 40% slab
- High-capacity cars (engine >1500 cc, SUVs, luxury sedans) fall under this rate
3. Gaming, Casinos & Betting
- Categories: Online gaming, casinos, gambling
- GST Rate: Increased from 28% → 40%
- ITC (Input Tax Credit) allowed, valuation aligned with new rules
GST Slabs for Automobiles Under New Regime
1. Small Cars, Motorcycles (≤350 cc), Buses, Trucks & Auto Parts
- New GST Rate: 18% (reduced from 28%)
- Covers: Small petrol/diesel cars, motorcycles ≤350 cc, buses, trucks, commercial vehicles
2. Large Engine Cars & Super-Luxury Vehicles
- New GST Rate: 40% (special slab)
- Covers: Cars above 1500 cc, SUVs, luxury sedans, vehicles >4 meters length
In short: Daily essentials, healthcare, education, and agriculture items get cheaper, while luxury cars, tobacco, sugary drinks, and gaming services get costlier.
