New GST Rates in India 2025: Complete Updated List Effective from 22 September
The new GST rates in 2025 are effective from September 22. Essential goods have a GST rate of 5%, while luxury items face higher slabs. Businesses must update pricing, e-invoicing, and GST returns to stay compliant.
New GST Rates List- Changes and Impact of new GST Rates on Common Man
It is important to stay updated on new GST rates if you operate a business in India. The Indian government has announced new GST rates for goods and services in a number of sectors, effective September 22, 2025. These changes impact pricing, invoicing, and compliance for MSMEs, retailers, and service providers alike.
Here's what you need to know to maintain compliance, stay out of trouble, and successfully plan your business strategy.
What is GST, and How Does it Work in India?
The Goods and Services Tax (GST) has a single tax system implemented on the supply of goods and services, streamlining taxation.
What is the GST Structure and the 4 main GST Slabs?
The GST Structure:
GST Structure in India
| GST Type | Full Form | Collected By | Applies To |
|---|---|---|---|
| CGST | Central Goods & Services Tax | Central Government | Intra-state sales (within same state) |
| SGST | State Goods & Services Tax | State Government | Intra-state sales (within same state) |
| IGST | Integrated Goods & Services Tax | Central Government | Inter-state sales (between different states) |
GST Tax Slabs
| Tax Slab | Rate | Example Items |
|---|---|---|
| Exempt | 0% | Fresh fruits, vegetables, milk, curd, bread |
| Lower Slab | 5% | Edible oils, tea, sugar, footwear (below certain price) |
| Standard Slab | 18% | Soaps, toothpaste, electronics, shoes, clothing (above threshold) |
| Luxury / Sin Goods | 40% (including cess) | Tobacco, aerated drinks, luxury cars |
To avoid mistakes in filing, it is essential to know which rate applies to your product or service.
Changes in GST Rates HSN-wise
For GST rates for HSN chapters along with HSN codes, new GST rates, and old GST rates, follow the table:
| HSN Chapter No. | Chapter Name | Old GST Rate | New GST Rate (Effective Sept 22, 2025) | Notes |
|---|---|---|---|---|
| 1 | Live Animals, Bovine & Poultry | 5% | 0% | UHT milk, paneer, roti, khakra now tax-free. |
| 2 | Meat & Edible Offal of Animals | 5% | 0% | Essentials exempt. |
| 3 | Fish Meat & Fillets | 5% | 0% | Fresh seafood exempt. |
| 4 | Eggs, Honey & Milk Products | 5–12% | 0–5% | Condensed milk exempt, butter/ghee/cheese at 5%. |
| 17 | Sugar, Jaggery, Honey & Bubble Gums | 5–18% | 5% | Sugar steady, chocolates shifted to 5%. |
| 18 | Chocolate & Cocoa Products | 18% | 5% | Chocolates much cheaper. |
| 19 | Pizza, Cake, Bread, Pasta & Waffles | 12–18% | 5% | Bread, pizza base, pasta now under 5%. |
| 22 | Water – Mineral & Aerated | 18%–28% | 18%–40% | Aerated drinks hiked to 40%. |
| 30 | Drugs & Pharmaceuticals | 12% | 0–5% | Life-saving drugs exempt, others at 5%. |
| 33 | Essential Oils, Beauty Products | 18% | 5% | Shampoos, powders, hair oils down to 5%. |
| 34 | Soaps, Waxes, Polish Products | 18% | 5% | Household cleaning cheaper. |
| 40 | Rubber, Plates, Condensed Milk (mixed items) | 12–18% | 5–18% | Industrial rubber unchanged, food-related shifted down. |
| 61–62 | Apparel & Clothing | 12% | 5% up to ₹2,500, 18% above | Budget wear cheaper, premium costlier. |
| 64 | Shoes & Footwear Products | 18% | 5% up to ₹2,500, 18% above | Mesh/sports shoes under ₹2,500 at 5%. |
| 71 | Pearls, Diamonds, Gold, Platinum | 3% | 3% | No change. |
| 86 | Railway Locomotives & Parts | 12% | 5% | Railway equipment cheaper. |
| 87 | Tractors & Motor Vehicles | 28% | 18–40% | Small cars at 18%, luxury cars/bikes at 40%. |
| 90 | Medical, Chemical & Astronomy | 12%–18% | 0–5% | Medical kits, bandages now 5% or Nil. |
| 92 | Musical Instruments | 18% | 18% | No change. |
| 94 | Furniture, Bedding & Lighting | 18% | 18% | No change. |
| 95 | Children Toys, Table & Board Games & Sports Goods | 12–18% | 12–18% | No major change. |
| 98–99 | Services | 5–28% | Mostly unchanged | Telecom 18%, online gaming/betting hiked to 40%. |
Key takeaways:
- Luxury goods and high-value services continue at 28%.
- Understanding which rate applies to your product or service is crucial to avoid errors in invoicing and filing.
- Businesses should double-check specific product classifications in the official gst rate in India notification to avoid mismatches.
Effects of New GST Rates on Small Businesses
Here's how pricing, invoicing, and profitability are all impacted by the new GST rates:
Pricing Strategy: If the GST slab increases, adjust the prices of your products for consumers. Reducing rates can help you to provide competitive pricing.
Billing and Invoices: As of September 22, 2025, invoices must be prepared using the updated GST rates. Using old GST rates can lead to compliance issues.
Here’s an example of the after and before effects of the GST Bill as per the new GST rates:
| Item | Base Price (₹) | Old GST Rate | Old Final Price (₹) | New GST Rate | New Final Price (₹) | Impact |
|---|---|---|---|---|---|---|
| Denim Jacket (₹3,000) | 3,000 | 12% | 3,360 | 18% | 3,540 | ❌ +₹180 costlier |
| Casual Shoes (₹1,800) | 1,800 | 18% | 2,124 | 5% | 1,890 | ✅ –₹234 cheaper |
| Smartphone (₹20,000) | 20,000 | 18% | 23,600 | 18% | 23,600 | ⏸️ No change |
| Refrigerator (₹20,000) | 20,000 | 28% | 25,600 | 18% | 23,600 | ✅ –₹2,000 cheaper |
| Hair Oil (₹200) | 200 | 18% | 236 | 5% | 210 | ✅ –₹26 cheaper |
| Luxury Car (₹20,00,000) | 20,00,000 | 28% + cess (~40%) | 28,00,000 | 40% flat | 28,00,000 (same or slightly higher depending on cess rules) | ❌ Costlier / unchanged |
| Cancer Medicine (₹5,000) | 5,000 | 12% | 5,600 | 0% | 5,000 | ✅ –₹600 cheaper |
| IPL Ticket (₹1,000) | 1,000 | 28% | 1,280 | 40% | 1,400 | ❌ +₹120 costlier |
Cash Flow Management: Your input tax credit is impacted by the new GST rates, which in turn affects your overall cash flow.
Sector-Specific Adjustments: Due to changes in GST rates in 2025, certain sectors such as luxury goods, telecommunications, and hospitality face changes in their profit margins.
Tip: Use GST-compliant accounting software updated with new GST rates as per 22 September. It can help MSMEs save time, cut down on errors, and automate these updates.
GST Rates Effective from 22 September 2025:
| Category / Product | Earlier GST Rate | New GST Rate (Effective 22 Sep 2025) | Notes / Change |
|---|---|---|---|
| Pens | 12% | 5% | Stationery cheaper |
| Packaging containers / boxes | 12% | 5% | Packaging cost reduced |
| Renewable energy devices (select) | 12% | 5% | Boost for green energy sector . |
| Printed materials / Recorded media | 12% | 5% | Books, media etc. cheaper . |
| Railway goods & parts (Ch 86) | 12% | 5% | Relief for rail-transported goods . |
| Vehicles retrofitted for disabilities | ~12% | 5% | Social welfare move . |
| Cancer treatment drugs (e.g., Keytruda) | 12% | 0% (Exempt) | Life-saving drugs exempt . |
| Border haat goods | N/A | 0% | Trade at Indo-Bangladesh border exempt . |
| Life-saving medicines & devices | 5–12% | 0–5% | Major relief for healthcare . |
| Essential food items (milk, paneer, khakra etc.) | 5% | 0% | Now fully exempt . |
| Dairy products (butter, ghee, cheese, spreads) | 12–18% | 5% | Cheaper dairy fats . |
| Chocolates & Pasta | 18% | 5% | Big reduction . |
| Personal care essentials (hair oil, shampoo etc.) | 18% | 5% | Everyday products cheaper . |
| Utensils | 12% | 5% | Relief for households . |
| Baby care items (diapers, bottles) | 12% | 5% | Infant products cheaper . |
| Maps, Charts, Notebooks, Pencils etc. | 12% / 5% | Nil | Education supplies exempt . |
| Consumer durables (AC, fridge, TV >32”) | 28% | 18% | Electronics cheaper |
| Mobiles & TVs ≤32” | 18% | 18% (unchanged) | No change. |
| Small cars / automobiles (≤ size threshold) | 28% | 18% | Small cars cheaper . |
| Luxury & premium cars | 28% + cess | 40% | Higher taxation . |
| Premium motorcycles >350cc | 28% + cess | 40% | Luxury category . |
| Aerated/carbonated beverages | 28% + cess | 40% | Sin goods taxed more . |
| Admission to sports events / gaming / casinos | 28% | 40% | Costlier tickets & gaming . |
| Precious metals / jewellery | 3% (unchanged small rates) | 3% | Nominal rate continues . |
| Tobacco | 28% + cess | 28% + cess (unchanged) | No change until cess settlement . |
| Apparel ≤ ₹1,000 | 5% | 5% | No change. |
| Apparel ₹1,001–₹2,500 | 12% | 5% | Mid-range clothes cheaper . |
| Apparel > ₹2,500 | 12% | 18% | Premium clothing costlier . |
| Denim jackets | 12% (if >₹1,000) | 5% (≤₹2,500) / 18% (>₹2,500) | Budget denim cheaper, premium denim costlier. |
| Footwear (sports, mesh, leather, canvas) | 18% (flat earlier) | 5% (≤₹2,500) / 18% (>₹2,500) | Big relief for affordable shoes . |
| Slippers / Chappals (rubber/synthetic) | 18% (since Jan 2022) | 5% (≤₹2,500) / 18% (>₹2,500) | Restored to lower rate for budget footwear. |
| Sandals / Floaters | 18% | 5% (≤₹2,500) / 18% (>₹2,500) | Dual-rate structure applied. |
| Restaurants (non-AC, takeaway) | 5% | 5% | No change. |
| AC Restaurants & Hotels (mid-range) | 12% | 12% | No change. |
| Luxury Hotels (>₹7,500 tariff) | 28% | 18% | Significant reduction . |
| Cosmetics (basic care, not perfumes) | 18% | 5% | Skincare & hygiene cheaper. |
Implementation Timeline for GST Rates in India:
- GST rate changes on services.
- GST rate changes on all goods, except for certain tobacco products.
Deferred Implementation GST Rates in India:
GST rate changes on pan masala, gutkha, cigarettes, chewing tobacco products like zarda, unmanufactured tobacco, and beedi will continue at the existing rates until the loan and interest payment obligations under the compensation cess account are completely discharged.
Read more- New GST invoice template.
How to Stay Compliant with New GST Rates.
Small businesses can guarantee compliance in the following ways:
✅ New Accounting Software: Make sure your accounting and billing software has been updated with the new GST rates.
✅ Verify Vendor Bills: Verify that your suppliers are also using the correct GST rate to avoid inconsistencies in input tax credits.
✅Inform Staff: Keep staff informed about applying the correct rates in invoices; your finance and sales teams need to be informed of the new GST rates.
✅ Track Notifications: Stay updated on any information on GST from the government.
Tips: GimBooks automatically update GST rates in accounting entries and invoices, which makes it simpler for MSMEs, SMEs, and SMBs to comply.
Conclusion
The new GST rates introduce minor but impactful changes in different businesses. One must avoid the compliance problem, keep accounting statements correct, and maximize cash flow.
With GST-compliant accounting software and informing your staff about new GST rates and the changes in the GST slabs, you can operate your business smoothly.
Frequently Asked Questions about New GST Rate / New GST Slab
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1. What are the new GST rates?
The new GST rates are 0%, 5%, and 18%, with a higher 40% rate specifically applied to particular goods such as luxury and sin goods.
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2. What are the new changes in GST 2025?
The latest GST reform (often called GST 2.0) simplified the GST structure. The major shift is to a two-slab system of 5% and 18%, effectively removing the earlier separate 12% and 28% slabs for most items. The reform aims to make taxation simpler and more transparent.
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3. Do MSMEs need to update invoices after 22 September with the new GST rates?
Yes. Invoices generated on and after 22 September 2025 should reflect the new GST rates. Businesses should update billing templates, POS systems, and accounting software to avoid compliance issues.
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4. What goods/services see the highest GST rate changes?
Luxury items, high-value electronics, and certain services (for example, betting/online gaming and premium event tickets) have seen the largest increases. Essentials and many everyday consumer items saw lower rates or exemptions.
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5. What are 5% GST items?
Typical items in the 5% slab include many daily consumables and household essentials — packaged namkeens, sauces, bhujia, instant noodles, pasta, chocolates, cornflakes, coffee, ghee, butter, certain dairy items and similar low-margin consumer goods. Exact classification depends on HSN/description, so check the official notifications or supplier invoices for HSN-level details.