New GST Rates effective from 22-9-2025: Major reform to ease consumer burden and simplify tax structure

On 17-9-2025, the Ministry of Finance notified the new rates of Goods and Services replacing the rates notified in the year 2017 on 28-6-2017 to streamline the tax structure and provide relief to consumers. The new rates will come into effect from 22-9-2025.

The new GST Rates are now categorized in 7 schedules:

Earlier the GST Rates were categorized in 6 schedules:

Key Features:

1. Rates on many essential and common household goods and services have been reduced to 5% as Schedule I now covers 516 items.

2. The slab of 6% rate has been completely removed.

3. 18% rates applicable on consumer electronics and compact cars.

4. 40% slab has been introduced which cover the luxury items such as:

   • All goods (including aerated waters), containing added sugar or other sweetening matter or flavored;

   • Other non-alcoholic beverages [other than those specified in Schedule I of this notification];

   • Caffeinated Beverages;

   • Carbonated beverages of fruit drink or carbonated beverages with fruit juice;

   • Motor cars and other motor vehicles principally designed for the transport of persons), including station wagons and racing cars except for some categories which belong under the 18% rate slab;

   • Motor vehicles with both spark-ignition internal combustion reciprocating piston engine and electric motor as motors for propulsion, of engine capacity exceeding 1200cc or of length exceeding 4000 mm;

   • Motor vehicles with both compression- ignition internal combustion piston engine [diesel-or semi diesel] and electric motor as motors for propulsion, of engine capacity exceeding 1500 cc or of length exceeding 4000 mm;

   • Motorcycles of engine capacity exceeding 350 cc;

   • Aircrafts for personal use;

   • Yachts and other vessels for pleasure or sports;

   • Revolvers and pistols with exemption on some;

   • Smoking pipes (including pipe bowls) and cigar or cigarette holders, and parts thereof;

   • Specified actionable claim- betting, casinos, gambling, horse racing, lottery, online money gaming.

5. Pearls, gold and silver jewelry are now covered under Schedule IV with a rate of 3%.

6. Schedule V prescribes the lowest rate of 0.25% on precious stones and diamonds.

7. Schedule VI covers all the special category goods except for the ones specified in Schedule V (Rough/ simply sawn/industrial/ non-industrial diamonds and synthetic/ reconstructed/ semi-precious stones).

8. Schedule VI now covers all the items related to tobacco and pan masala with a rate of 28%.

New rates vs old rates:

Launching soon: GST Rate Finder 2.0 on SCC Online Tax Edition.

To know more about GST please click here: GST Rates 2.0