In a significant update on the Goods and Services Tax (GST) framework, Finance Minister Nirmala Sitharaman announced on September 3, 2025, that the GST Council has decided to consolidate the existing tax slabs into two main categories: 5% and 18%. This structural reform, which will take effect on September 22, is set to eliminate the previously applicable 12% and 28% rates, resulting in reduced costs for a wide range of goods and services.
The finance minister emphasized that this adjustment is more than a mere rationalization of rates; it represents a comprehensive structural reform aimed at simplifying compliance. Sitharaman specifically noted that prices of many commonly used items would decrease, providing relief to consumers across the board.
Implementation Date and Exceptions
The new GST rates will apply to all goods except for specific categories such as pan masala, gutkha, cigarettes, and other chewing tobacco products. Those particular items will continue to attract the higher tax rates, reflecting ongoing concerns about public health and related issues.
Highlights of the New GST Rates
The following key items will see their GST rates adjusted downwards:
- Live Horses: Reduced from 12% to 5%
- Ultra-High Temperature (UHT) Milk: From 5% to 0%
- Condensed Milk, Butter, and Cheeses: Decrease from 12% to 5%
- Nuts and Dried Fruits: All applicable items are reduced from 12% to 5%
- Processed Meats and Seafood: Rates drop from 12% to 5%
Comprehensive changes will also affect the prices of items such as:
- Fats and Oils: Various categories now fall from 12% to 5%
- Sausages and Similar Products: Cut down from 12% to 5%
- Sugars and Confections: Changes from 18% and 12% to 5%
- Prepared Foods including Pastas and Bakery Items: Many of these will see a shift from 12% to 5%
- Beverages: Several non-alcoholic options will now be notably cheaper, bringing down costs associated with healthy drinking options, including bottled water and plant-based drinks, which are shifting from 12% or 18% down to 5%.
The exhaustive list of goods and their respective GST adjustments can be categorized across multiple segments:
Dairy Products
Most dairy items will now be categorized under the lower tax bracket. Specific examples include:
- UHT Milk: No tax to 5%
- Condensed Milk: From 12% to 5%
- Cheese and Butter: From 12% to 5%
Fruits and Nuts
This category mainly comprises dried or processed fruits, which are essential for dietary requirements. Items affected are:
- Nuts (Brazil nuts, almonds, etc.): From 12% to 5%
- Dried fruits: All will switch from 12% to 5%.
Prepared Foods
A variety of prepared foods, especially snacks, and desserts will benefit from the tax reduction:
- Pasta and bakery products: Will go from 12% to 5%
- Final confectionery: Reduced from 28% to 5%
Beverages
In the beverage category, both alcoholic and non-alcoholic will experience changes:
- Non-alcoholic beverages: Most will reduce from 18% to 5% or further.
- Carbonated drinks: Remain at a different tier, largely concerned with artificial enhancements.
Miscellaneous Items
Various household goods and personal care products will also become cheaper. For instance:
- Toilet Soap and Shampoos: Dropping from 18% to 5%
- Medical devices and supplies: Adjusted lower for healthcare access improvement.
Key Takeaways
This GST reform is not merely a change in rates but a structural shift that aims to alleviate the financial burden on consumers. As a direct outcome, citizens can expect to see changes at retail points across various sectors, influencing their daily purchases.
For further insights into the new GST rates and how they will impact individual purchases, stay tuned for updates from financial news outlets and government notifications. It is crucial for consumers to be aware of price changes and continue to seek information on the broader implications of these tax reforms on both personal finances and the economy at large.
This initiative reflects a continuous effort by the Indian government to streamline the taxation process, aiming for a more efficient economy and reduced compliance burdens for businesses and consumers alike.