The GST Council has unveiled a landmark tax reform, effectively changing the landscape of India’s Goods and Services Tax (GST) with the introduction of just two simplified rates: 5% and 18%. This reform eliminates the previous 12% and 28% slabs, bringing relief to millions of consumers and businesses as prices on thousands of items are set to decline from September 22, 2025.
Government Statement and Rationale
Finance Minister Nirmala Sitharaman highlighted the initiative as a “structural reform” aimed at making GST compliance easier and slashing costs for everyday essentials. Rates on nearly all commonly used items, except for select luxury and sin goods such as pan masala, gutkha, cigarettes, chewing tobacco, and some tobacco products, have come down.
“We are committed to making taxation fair, transparent, and straightforward for every Indian. The new slabs mean more affordable goods, less paperwork, and a business environment where entrepreneurs can flourish,” Sitharaman stated in her briefing.
What Gets Cheaper? A Full List
The list of products now taxed at lower or nil rates covers nearly every category imaginable, from basic groceries to industrial goods. Here are major highlights:
| Item Description | Previous GST | New GST |
|---|---|---|
| Live horses | 12% | 5% |
| UHT milk | 5% | 0% |
| Condensed milk | 12% | 5% |
| Butter, ghee, dairy fats/oils | 12% | 5% |
| Cheese | 12% | 5% |
| Paneer, pre-packaged/labelled | 5% | 0% |
| Dried Brazil nuts | 12% | 5% |
| Almonds, hazelnuts, pistachios, other dried nuts | 12% | 5% |
| Dried fruits (figs, pineapples, avocados, etc.) | 12% | 5% |
| Dried citrus fruit, mixtures of dried fruit/nuts | 12% | 5% |
| Malt, roasted or not | 18% | 5% |
| Starches, inulin | 12% | 5% |
| Vegetable saps/extracts, pectin, agar-agar | 18% | 5% |
| Bidi wrapper leaves (tendu) | 18% | 5% |
| Pig/bovine/lard/poultry fats | 12% | 5% |
| Animal fats/oils, lanolin | 12% | 5% |
| Edible animal/microbial fat preparations | 12% | 5% |
| Margarine, linoxyn | 18% | 5% |
| Sausages, prepared meats, preserved fish | 12% | 5% |
| Refined sugar (with flavouring/color) | 12% | 5% |
| Sugars, syrups, confectionery, artificial honey | 18%/12% | 5% |
| Cocoa butter, chocolates, cocoa powder | 18% | 5% |
| Malt extract, starch-based food preps | 18% | 5% |
| Pasta, noodles, couscous | 12% | 5% |
| Corn flakes, bulgar wheat, cereal flakes | 18% | 5% |
| Biscuits, cakes, bakery items (not bread) | 18% | 5% |
| Frozen, processed vegetables | 12% | 5% |
| Jams, jellies, marmalades, fruit/nut purees | 12% | 5% |
| Fruit/vegetable juice, coconut water (packaged) | 12% | 5% |
| Yeast, baking powder | 12% | 5% |
| Sauces, seasonings, mayonnaise, curry paste | 12% | 5% |
| Text. veg. protein (soya bari, mungodi), batters | 12% | 5% |
| Namkeens (packaged/labelled, not roasted gram) | 12% | 5% |
| Drinking water (20L bottles) | 12% | 5% |
| Soya milk drinks | 12% | 5% |
| Diabetic foods | 12% | 5% |
| Beverages containing milk | 12% | 5% |
| Tender coconut water (pre-packaged) | 12% | 5% |
| Plant-based milk drinks | 18% | 5% |
| Non-alcoholic drinks, caffeine and carbonated drinks | Up to 40% | Up to 40% (unchanged/higher for sin goods) |
| Solar cookers, water heaters, renewable energy parts | 12% | 5% |
| Tractor, trailer parts, agricultural mach. parts | 18%/12% | 5% |
| Footwear ≤ Rs. 2500 per pair | 12% | 5% |
| Medical oxygen, hydrogen peroxide, anaesthetics | 12% | 5% |
| Drugs & medicines (various types) | 12% | 5%/0% |
| Bandages, wound dressings, surgical goods | 12% | 5% |
| Diagnostic kits, reagents | 12% | 5% |
| Glucometer, test strips, spectacle frames, lenses | 12% | 5% |
| Shampoo, toothpaste, face/talcum powder, hair oil | 18%/12% | 5% |
| Toys, board games (not electronic), dolls, puzzles | 12% | 5% |
| Handmade art items, paintings, statues, handicraft | 12% | 5% |
| Bicycles, cycle parts (non-motorized) | 12% | 5% |
| Notebooks, exercise books, paper stationery | 12% | 0% |
| Pencil sharpeners, erasers, crayons, chalk, pencils | 12%/5% | 0% |
Note:
- Many items previously at 12% and 18% have moved to 5%.
- Items at 5% could be reduced to 0%.
- Select essential medicines, medical goods, and education supplies also now enjoy lower or zero GST.
- Goods like pan masala, gutkha, cigarettes, tobacco, and luxury/sin items retain higher GST rates (unchanged or up to 40%).
This covers nearly all processed foods, snacks, beverages, bakery items, dairy, nuts, personal care, handicrafts, basic medical and stationery products, and more. The official GST Council notification includes even more specific sub-categories for rates
Implementation
- The new GST rates will be effective from September 22, 2025.
- Exemptions and unchanged rates remain for a few luxury, tobacco, and sin goods.
Conclusion
This sweeping reform is expected to have a positive impact on the Indian economy, bringing relief to both suppliers and consumers by printing a clearer and more accessible tax code, lowering prices for daily essentials, and rewarding compliance with simplicity.
