India's newly updated Goods and Services Tax (GST) regime will take effect on September 22, 2025. The Indian government has touted this redesign as a landmark reform aimed at simplifying compliance with taxes and reducing costs to households. Finance Minister Nirmala Sitharaman said the new structure will inject Rs 2 lakh crore into the economy by boosting disposable incomes and spurring consumption.
Products like UHT milk, pre-packaged paneer, chena, and Indian bread products such as chapati, roti, paratha, and khakhara have been fully exempted from GST.
Families with unique dietary preferences can also benefit as plant-based beverages, such as soy and almond milk, now have GST at only 5% compared to previous rates of 12-18%.
Healthcare has been one of the largest beneficiaries under the revised structure. 33 life-saving medicines and drugs have been placed in the Nil GST tax category, including treatments for cancer and rare diseases such as Agalsidase Beta, Daratumumab, and Risdiplam.
Additionally, many medicines that were charged 12% are now exempt, ensuring that their prices remain affordable.
The rate cuts apply to common household and personal care products, such as soap, shampoo, hair oil, face creams, and shaving products. The relief also included educational items such as pencils, erasers, notebooks, and atlases, which were moved to be in the Nil GST category.
GST on air-conditioners, washing machines, and dishwashers has been reduced from 28% to 18%. The construction sector benefits as well, with cement now taxed at 18% instead of 28%, which is expected to lower housing costs.
Additionally, medical devices like diagnostic kits and glucometers are now taxed at just 5%.
The services sector has not been left behind. Everyday offerings such as salon treatments, haircuts, yoga centres, gyms, and health clubs now attract lower GST rates, making them more accessible to the average consumer.
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While essentials are cheaper, the government has tightened taxation on luxury and sin goods. A unified 40% GST now applies to cigarettes, gutka, pan masala, and chewing tobacco, as well as soft drinks and aerated beverages like Coca-Cola, Pepsi, and Fanta.
High-end automobiles face a steeper levy. SUVs and MPVs above 1,200cc (petrol) or 1,500cc (diesel) and longer than four metres are taxed at 40%.
Large motorcycles above 350cc also fall under the same slab. Though the cess has been merged into GST, the effective burden remains among the highest. Online gaming and betting services are similarly taxed at 40%.
Premium services such as fine-dining restaurants, imported smartphones, and high-end grooming or spa services continue to attract the 18% slab.