GST Rates in India 2025: New List, Slabs, and Reforms
04 September 2025 · Sachin Gadekar
A Complete Guide to New GST Rates, Slabs, and Their Impact
Understanding GST in India
The Goods and Services Tax (GST) is one of the most significant tax reforms in India’s history, streamlining the country’s indirect tax structure. Since its launch in 2017, GST has undergone multiple changes, including revisions to rates, product classifications, and compliance requirements.
In 2025, the GST Council introduced major reforms to simplify the structure. The Council has now reduced the number of tax slabs, cut rates for essential goods, and revised the overall GST framework to promote economic growth and ease compliance.
This article provides a detailed breakdown of the new GST rates list, GST slab rates, and reforms effective from September 22, 2025.
GST is a destination-based, indirect tax levied on the supply of goods and services across India. It subsumes multiple taxes such as VAT, excise duty, and service tax, creating a single national market.
Previously, GST had four slabs — 5%, 12%, 18%, and 28% — along with exemptions. However, the GST Council has now moved to a two-slab structure to simplify taxation.
New GST Slabs in 2025
| GST Slab | Description |
|---|---|
| 5% GST | Essential goods, basic food items, healthcare, education services, public transport, etc. |
| 18% GST | Consumer goods, industrial products, luxury services, automobiles, electronics, and other standard items. |
New GST Rate List 2025
Here is a snapshot of the updated GST rates for key product categories:
Essential Goods and Services (5% GST)
Packaged food items like flour, rice, and wheat
Public transport (non-AC bus services)
Life-saving drugs and medical equipment
Education services
Renewable energy equipment
Standard Goods and Services (18% GST)
Automobiles (cars, two-wheelers, EVs)
Consumer electronics (TVs, refrigerators, washing machines)
Hotel stays above ₹1,000 per night
Telecom and internet services
Processed foods and packaged snacks
Luxury personal care products
Comparison of Old vs New GST Rates (2025)
| Product Category | Old GST Rate | New GST Rate |
|---|---|---|
| Packaged food items | 12% | 5% |
| Automobiles (cars) | 28% | 18% |
| Consumer electronics | 28% | 18% |
| Hotel stays (₹1,000+) | 12% / 18% | 18% |
| Telecom services | 18% | 18% (no change) |
| Medicines | 12% | 5% |
Key Highlights of GST Reforms 2025
1. Two-tier system introduced
Only 5% and 18% slabs remain.
Eliminates disputes related to classification between 12% and 18% items.
2. Cheaper essential goods
Packaged foods, medicines, and renewable energy equipment now under 5%.
3. Lower taxes on big-ticket items
Automobiles and electronics shifted from 28% to 18%, boosting demand.
4. Boost for MSMEs
Simplified compliance and reduced paperwork for businesses under GST.
5. Higher compliance efficiency
Fewer slabs mean simpler filings and less confusion for both businesses and consumers.
Impact of New GST Rates
On Consumers
Cheaper essentials like food and medicines ease household expenses.
Affordable electronics and vehicles encourage big-ticket purchases.
However, hotel stays and luxury services may become costlier under the unified 18% slab.
On Businesses
Simplified compliance reduces tax disputes and operational costs.
Lower GST on vehicles and electronics may boost automobile and consumer durables sectors.
MSMEs benefit from reduced complexities in filing returns.
On the Economy
The two-tier GST structure is expected to increase compliance and expand the tax base.
Lower tax rates on industrial products can boost manufacturing and job creation.
Overall, the reform supports Make in India and consumer demand growth.
GST Rate Cuts: Who Benefits the Most?
Middle-class families: Lower rates on packaged food, medicines, and daily essentials.
Small businesses: Easier compliance with just two slabs.
Auto and electronics sectors: Likely to see higher sales as consumer prices drop.
Government: Improved compliance and reduced tax evasion with simplified structure.
Frequently Asked Questions (FAQs)
1. What are the new GST slabs in 2025?
The GST Council has reduced the slabs to just two — 5% for essentials and 18% for all other goods and services.
2. Which goods are cheaper after the GST rate cut?
Packaged food items, medicines, and renewable energy equipment are cheaper under the new 5% slab. Automobiles and consumer electronics also see reduced rates from 28% to 18%.
3. Are hotel and luxury services cheaper or costlier now?
Hotel stays above ₹1,000 per night are taxed at 18% under the new system, making some stays costlier compared to earlier slabs.
4. How will businesses benefit from the new GST rates?
Businesses will face simplified compliance with fewer slabs, lower disputes, and reduced paperwork, particularly beneficial for MSMEs.
5. When do the new GST rates come into effect?
The new GST rates and reforms come into effect from September 22, 2025.