A new tax system has been implemented in India from today under GST 2.0. Two new rates of 5% and 18% were introduced at the GST Council meeting held on 3 September. In addition, chronic rates of 12% and 28% have been abolished, while a new third rate of 40% will be imposed on luxury items. Additionally, many everyday things have been freed from tax.
This change will be effective in the whole country from today, the most important effect will be seen on the electronic sector. Products such as air conditioners, refrigerators, washing machines, dishwashers and large -screen TVs were earlier taxed 28%, which has now come down to 18%. With this significant deduction, all these home appliances will become cheap, which will make it more accessible to buy them for middle class families of the country. The purpose of this step is to promote economic development and benefit the general public. It emphasizes new tax structure, simplification and strength, which is expected to promote consumer expenses and strengthen the economy.
GST’s new slab
5% – Everyday items 18% – Household items and electronic like Standards Goods 40% – Luxury items
What is GST?
GST means Goods and Services Tax. It is an indirect tax implemented in India that is levied on the supply of goods and services. GST has replaced many old indirect taxes, such as excise, VAT and service tax, and replaced them. Its main objective is to create an integrated market across the country by implementing the concept of “one nation, one tax” in India. GST is a multi-level tax, which means that it is levied on the price increase from production to the last consumer. This makes the tax system simple and more transparent, and facilitates both businesses and consumers.
When will the revised GST rates come into force?
As per the recommendation of the GST Council, the new GST rates will be applicable from 22 September 2025.
After the implementation of the revised GST rates, many things have become cheaper from today.
Packets such as flour, rice, pulses, biscuits, salty soap, oil, toothpaste, shampoo butter, ghee, cheese, curd coffee, jam, ketchup, dried dry fruits, ice cream
Electronic and home appliances (now 18% GST)
Air Conditioner (AC) Refrigerator (Fridge) Washing Machine Dishwasher with large screen TVs, monitor, and projector
other items
Many medicines and medical equipment bicycle cement (28% to 18%) commuters cars (small vehicles), three -wheelers, ambulance hotel rooms (now 5% GST on tariffs up to Rs 7,500)
From paan masala to cold drink
With the implementation of the new GST system, tax rates have been increased on some select goods. These items are placed in a new high tax slab of 40%. These products mainly include luxury and “sin goods” (harmful objects).
Here is a list of major items that have become expensive from today:
Beverages: All types of cold drinks, carbonated drinks, caffeinated drinks, and flavored drinks.
Tobacco products: Cigarettes, cigars, paan masala, gutkha and other tobacco products.
Luxury vehicles: petrol cars with engine more than 1200cc and diesel cars with more than 1500cc engine.
Other: Large motorcycles, private jets and boats with engine capacity more than 350cc capacity.
This step is part of the government’s policy of imposing more taxes on “Sin Goods”, so that their consumption can be discouraged.
There has been no change in GST rates for train travel.
AC Classes: AC coach (1AC, 2AC, 3AC, AC Chair Car, and Executive Chair Car) will have 5% GST as before.
Non-AC Classes: sleeper class and second seating (2S) tickets are free from GST as before.
LPG cylinder
The prices of LPG cylinders have also not been affected as GST rates are unchanged. Domestic LPG cylinder: Domestic use cylinders will continue to be charged 5% GST as before. Commercial LPG Cylinder: 18% GST will continue on commercial use cylinders.
Reduced prices of everyday goods
For your information, let us know that after the implementation of GST 2.0, the tax on many everyday items has been reduced from 18% to 5%. This is expected to save a big savings in the monthly expenses of common families.
Here is a list of major goods that are now in 5% GST slab:
grocery:
Packets such as flour, rice, pulses, biscuits, salty, bhujia.
Dairy products such as butter, ghee, cheese, yogurt.
Other food items such as coffee, jam, ketchup, dried fruits, ice cream.
Personal Care and Grooming Products:
Oil, soap, shampoo, toothpaste, toothbrush.
Talcum powder, shaving cream, shaving lotion, aftershev.
Baby products, including diapers.
This change, in which about 99% of everyday items have been brought into low tax slabs, will directly increase the saving of the common man and also boost demand in the market.
Large relief in health and medical fields
Under the new GST system, many products and services related to health and medical have become cheaper.
Medicines: 33 life saving medicines and 3 serious diseases are now completely tax-free. At the same time, the GST rate on all other medicines has come down from 12% to 5%.
Medical Equipment: Diagnostic kits and other medical equipment have also come into low tax slab, making them more economical.
Wellness and beauty services cut
GST rate cuts have also affected the wellness and beauty industry.
Wellness Services: Earlier these services used to levy 18% GST, which is now reduced to only 5%.
Services involved: This includes services such as gym membership, haircut or facial, yoga class and spa treatment in the salon.
This step will make the facilities related to health and lifestyle more accessible and cheaper to the general public.
Relief on hotel and education
Hotel Room: GST has now come down from 12% to 5% on hotel room tariffs up to ₹ 7,500. This will greatly benefit the tourism and traveling people.
Things related to children’s education: Stationary items like copy, pencils, rubber, crayon and sharpener have now become completely tax free for children. Apart from this, geometry box, school cartons and trays will also be levied only 5% tax.
The biggest relief for insurance holders
The biggest benefit of GST 2.0 has been given to the insurance sector. Now there will be no GST on life insurance and health insurance policies. This includes all the following policies:
Life Insurance: Term Plan, ULIP and Endowment Plan.
Health Insurance: Family or Senior Citizen Health Plan.
With this change, taking insurance policies has become even more cheaper, so that people will be able to ensure financial security and health coverage easily.