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GST 2025: A Simplified Tax Structure for the Common Man
The Goods and Services Tax (GST) system in India has been revamped, reducing complexity and making it more consumer-friendly. With a focus on daily essentials, the new GST slabs of 5%, 18%, and 40% promise lower prices on necessities and higher taxes on luxury items.
India’s GST Overhaul: Key Changes You Should Know About
The Goods and Services Tax (GST) system in India has been simplified to benefit consumers, businesses, and the economy. Previously, the system had multiple tax slabs (5%, 12%, 18%, and 28%). Now, the GST structure has been streamlined into three primary slabs - 5%, 18%, and 40%—with a focus on providing relief to common goods and imposing heavier taxes on luxury items. These changes, effected from September 22,2025, aim to reduce the burden on essential goods while increasing taxes on indulgent products.
Here's everything you need to know about the new GST structure.
Zero GST: Essentials Now More Affordable
One of the most significant changes in the new GST structure is the introduction of a 0% GST slab. Several everyday items that were previously taxed are now completely exempt from GST, meaning you’ll pay less for these goods:
- Stationery items: Exercise books, notebooks, pencils, erasers, crayons, sharpeners, charts, globes, and more are now free of GST.
- Food items: Ultra-High Temperature (UHT) milk will now attract zero GST, ensuring more savings for families.
- Life-saving drugs: Medications like Asciminib, Mepolizumab, Daratumumab, Teclistamab, and other critical medicines for chronic conditions and diseases will be available without GST.
These changes make essentials more affordable, particularly for families and people requiring life-saving medications.
5% GST Slab: Price Reductions on Everyday Items
The 5% GST slab brings tax relief on several common household items, from food to healthcare. Here's a glimpse of what’s now in the 5% tax bracket:
Food products:
- Dairy: Butter, ghee, condensed milk, cheese, and other dairy products
- Dry fruits: Brazil nuts, almonds, pistachios
- Fruits: Dates, figs, citrus fruits, and dried mangoes
Healthcare:
- Medical-grade oxygen
- Diagnostic kits and reagents
- Glucometers, test strips, thermometers
Personal care products:
- Face powder, hair oil, shampoo, toothpaste, shaving cream, and more
This reduction is likely to impact the everyday budget of families across India, making personal care and healthcare more affordable.
18% GST Slab: Regular Goods & Vehicles
For goods that don’t fall into the "luxury" or "essential" categories, the 18% GST slab will continue to apply. This includes a mix of essential yet higher-priced goods:
Automobiles:
- Petrol hybrid LPG cars, CNG vehicles (up to 1200 cc), and diesel hybrid cars (up to 1500 cc)
- Motorcycles (below 350 cc)
- Three-wheeled vehicles
Electronics:
- Air conditioners
- Televisions larger than 32 inches
- Projectors and monitors
While these items will still incur a tax, the 18% rate offers a reduction from the previous 28%, making electronic products and mid-range vehicles slightly more affordable.
40% GST Slab: Luxury Goods and Sin Tax
To address excess consumption of luxury items and harmful goods, a 40% GST slab has been introduced for products considered non-essential or indulgent. These include:
Tobacco & Vapes:
- Cigarettes, cigars, chewing tobacco, vapes, and related products will see a 40% tax hike.
Luxury Cars & Motorcycles:
- Cars with engines above 1200cc (petrol) or 1500cc (diesel)
- High-end motorcycles (above 350cc)
- Yachts, private vessels, and personal-use aircraft
This high tax rate is designed to discourage the purchase of luxury and environmentally harmful products while funding public welfare initiatives.
Why These Changes Matter to You
The GST overhaul will impact nearly every Indian consumer:
- Essential Goods Are Cheaper: Everyday food items, stationery, and crucial healthcare products will now be more affordable, offering relief to families, students, and patients.
- Affordable Electronics and Vehicles: Mid-range cars, motorbikes, and electronics are now less expensive, making these accessible to a wider section of society.
- Luxury Goods Pay More: If you’re indulging in luxury products, be prepared to pay a significantly higher tax, especially on cars, tobacco, and personal-use aircraft. This aims to curb overconsumption and make wealth distribution more equitable.
For businesses, the new structure reduces the complexity of tax compliance, ensuring smoother operations across sectors.
This revamped GST system promises better savings for the common man while ensuring that those purchasing luxury or indulgent products contribute more. With these changes, everyday essentials are now more accessible to the average consumer, making it a win-win for most. What are your thoughts on these tax changes? Let us know below!
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