New GST Rates List 2025: What’s Cheaper, What’s Expensive & How It Impacts You

India’s historic GST reforms, announced on September 3, 2025, simplifies the tax structure dramatically—from four rate slabs to two major ones (5% and 18%) plus a 40% “sin tax” for luxury items. New GST Rates will be effective from September 22, it affects hundreds of goods and services. This guide explains the New GST Rates List 2025 in detail:

What items become cheaper (and why)
What now costs more
How it affects your budget, investments & insurance
How to take advantage with smarter personal finance choices

Table of Contents

New GST Rates List 2025 with Examples of Items
1. New GST Slab Rates
2. What Consumers Pay Less For (Great Relief!)
3. What’s More Expensive Now?
4. From a Personal Budget Perspective
- New GST Rate on Cars
  - Car Loan EMI Calculation and Prepayment Video
- New GST Rate on Two Wheeler or Bike
5. Financial Planning & Investment Impacts
6. Example Scenarios
7. How to Maximize Benefits Using Your FinCalC Tools
Conclusion
Frequently Asked Questions

New GST Rates List 2025 with Examples of Items

GST Slab Rate	Examples of Items (2025 Reforms)
0% (Nil Rate)	Roti, chapati, paratha, khakra, paneer, unbranded milk, UHT milk, fresh vegetables, life-saving drugs
5%	Shampoo, soap, toothpaste, toothbrush, feeding bottles, kitchenware, umbrellas, combs, biscuits, noodles, cornflakes, butter, cheese, packaged nuts, agricultural inputs (tractors, irrigation parts, bio-pesticides)
18%	Televisions, refrigerators, ACs, washing machines, cars (<1500 cc), motorcycles (<350 cc), electric vehicles, furniture, branded clothing, restaurants (non-luxury), mutual fund AMC fees
40% (Sin & Luxury Tax)	Cigarettes, gutkha, pan masala, tobacco, caffeinated/energy drinks, yachts, helicopters, luxury cars (>1500 cc), high-end motorcycles (>350 cc), alcohol, carbonated beverages

Let us now discuss these in detail.

1. New GST Slab Rates

Previously, goods/services were taxed at 5%, 12%, 18%, and 28% plus cess, often creating confusion and disputes. The new structure:

5% slab: for essentials like food, household items, hygiene products
18% slab: for most goods and services (including electronics and vehicles)
40% slab: sin and luxury goods—examples are tobacco, big cars, alcoholic and carbonated beverages

A brand-new zero (nil) rate also applies to a range of essential food items (e.g., roti, paneer, unbranded milk), making everyday staples more affordable.

2. What Consumers Pay Less For (Great Relief!)

Here’s how everyday budgets can breathe easier:

Food & Daily Staples
Mass market goods once taxed at 12–18% now often attract 5% or nil GST. For instance:

Paneer, chenna, UHT milk, khakra, chapati/paratha—now zero tax
Butter, cheese, biscuits, packaged nuts, noodles, cornflakes—down to 5%

Hygiene & Household Items
Products like shampoo, soap, toothpaste, toothbrush, tableware, umbrellas, kitchenware, feeding bottles, and combs—GST dropped from 18% to 5%.
This relieves pressure on household budgets, especially for families.

Medical & Health Essentials

Life-saving drugs and critical healthcare materials reduced to 5% or nil.
Most individual health and life insurance policies are now fully exempt from GST—no 18% loading, making premiums significantly more affordable.

Automobiles & Electronics

Small cars, motorcycles ≤350cc, basic two-wheelers, and EVs now taxed at 18% (down from 28%).
Televisions, air conditioners, kitchen appliances—reduced to 18% GST instead of 28%.
This encourages upgrading basics before September 22.

Agri & Rural Relief
Items like tractors, drip irrigation parts, bio-pesticides, fertilizer inputs—all slashed to 5%, supporting farmers directly.

ALSO READ: 5 Habits of Rich People that will Change your Life

3. What’s More Expensive Now?

The Government introduced a 40% GST slab for:

Tobacco products (cigarettes, gutkha, pan masala)
Caffeinated, carbonated beverages
High-end vehicles (>1,500 cc), yachts, helicopters
This discourages consumption of harmful/luxury goods while simplifying tax.

4. From a Personal Budget Perspective

Inflation is easing right when festive demand rises. With GST cuts coming into effect Sept 22, households should reconsider purchase timing:

Stock up on essential items before prices dip
Plan big purchases (like ACs, TVs, appliances, two-wheelers) after Sept 22 for additional savings
Health/life insurance policies: buying before effective date still cheaper, but better to lock premium without GST after the new GST rates are applicable

ALSO READ: 10 Essential Budgeting Tips for Beginners

New GST Rate on Cars

Earlier, most passenger cars attracted a steep 28% GST, with additional cess depending on engine size and type. This pushed car prices significantly higher, especially for mid-segment buyers.

Under the GST 2.0 reforms of September 2025:

Small and mid-sized cars (engine capacity ≤ 1500 cc) now attract 18% GST, down from 28%.
Electric cars (EVs) also fall under the 18% GST slab, encouraging faster adoption of clean mobility.
Luxury cars (engine >1500 cc), sports utility vehicles (SUVs), and high-end models now come under the 40% slab.

Impact on Buyers:

A mid-size car priced at ₹10 lakh pre-GST change had a tax of ₹2.8 lakh (28%).
Under the new 18% GST, the tax is ₹1.8 lakh, saving ₹1 lakh upfront.
This makes car ownership more affordable, likely boosting demand in the festive season.

Finance Planning Tip: Use the Car Loan EMI Calculator Excel to check how a reduced car price lowers EMIs and helps in early loan prepayment

Car Loan EMI Calculation and Prepayment Video

Watch more Videos on YouTube Channel

New GST Rate on Two Wheeler or Bike

Two-wheelers were also taxed at a flat 28% GST rate, making them pricier for rural and urban middle-class buyers.

With the new reforms:

Motorcycles and scooters (engine ≤ 350 cc) now fall under the 18% GST slab.
Electric two-wheelers (EV bikes, scooters) are also taxed at 18%, aligning with India’s EV push.
Premium motorcycles (engine > 350 cc) fall under the 40% GST slab, similar to luxury cars, discouraging excessive imports of high-end bikes.

Impact on Buyers:

A scooter costing ₹1,00,000 earlier had ₹28,000 GST.
Now, at 18%, GST is only ₹18,000—saving ₹10,000 upfront.
This directly reduces Bike Loan EMIs and makes two-wheelers much more affordable for daily commuters and rural households.

Finance Planning Tip: The money saved (₹8,000–₹12,000) can be redirected into a Systematic Investment Plan (SIP) or used for fuel + maintenance budgeting in your Excel expense tracker.

5. Financial Planning & Investment Impacts

The GST reforms ripple into personal finance decisions:

Insurance Planning
Premiums just fell (~18% lower)—a good time to:

Increase coverage (term cover, family floater)
Allocate saved premium amount into ELSS/NPS/PPF to grow your tax-free corpus faster
Boost budgeting Excel tools (like your tax calculator) to re-run scenarios under new regime

Expense Management
Reduced GST on essentials frees up spending amount —great to redirect into:

Emergency fund
Retail mutual funds or SIP investment

Consumer Durables & Vehicle Upgrades
Lower GST on electronics and vehicles reduces overall cost by 5–10%. Encourages:

Buying now vs waiting; also impacts loan EMI and planning
Use your loan repayment planner to calculate prepayment benefits if upgrading

6. Example Scenarios

Scenario A: Family of 4 (Monthly Savings Impact)

Category	Pre-Sept GST	Post-Sept GST	Benefit (₹) per month
Shampoo/Soap/Toothpaste	18%	5%	180
Milk, Paneer, Bread	5–18%	Nil	150
Soap, combs, tableware	12–18%	5%	120
Total Household Relief	—	—	~~₹450/month (~~₹5,400/year)

Money saved helps with EMI, SIP, or emergency.

Scenario B: Buying a TV worth ₹50,000

Pre-Sept tax (28%) = ₹14,000
Post-Sept tax (18%) = ₹9,000
You save ₹5,000 instantly. Add any discount + cashback = ~15–20% overall saving.

Scenario C: Taking Life Insurance

A ₹10 lakh term plan charging ₹10,000 premium/year:

Pre-Sept cost = ₹11,800 with GST
New cost = ₹10,000 (GST waived)
Buy now to lock-in lower premium.

7. How to Maximize Benefits Using Your FinCalC Tools

Use the Tax Calculator Excel: Adjust monthly expenses and insurance section to reflect new GST structure; re-check tax regime vs cash flow
Budget Planner Sheet: Reduce spent on GST-heavy items and reroute into SIP or savings
Loan & Portfolio Tracker: Simulate upgrades based on new GST, ROI, EMI impact

Conclusion

GST slabs simplified to 5% and 18%, with a 40% sin tax slab added
Hundreds of daily-use goods now cheaper or zero-GST
Insurance premiums lower immediately—good time to invest in security
Consumers should delay big purchases until Sept 22 for better rates
Use Fincalc Excel tools to re-run your budget and investment plans post-reform

Frequently Asked Questions

Q1. When do GST changes take effect?
They apply from 22 September 2025, except for sin goods (tobacco etc.) which remain in current slabs until compensation cess obligations are cleared.

Q2. Are medicines and healthcare items cheaper now?
Yes—critical drugs and medical supplies now have either 5% GST or zero tax. Also, individual life & health insurance are now fully exempt from GST.

Q3. What is taxed at 40% GST now?
Luxury and sin goods—like cigarettes, pan masala, yachts, alcohol, high-cc bikes/cars, and carbonated drinks—are now under a new 40% slab.

Q4. How should individuals adjust personal finance post this reform?
Review your expenses and monthly budgets; reallocate saved GST amounts into investments (like SIPs or emergency fund) using your Excel tools. Delay expensive buys until rates fall; lock lower insurance premiums now.

Q5. How does this reform affect inflation and overall economy?
Lower GST on essentials reduces consumer inflation. It may also spur growth in consumption, particularly ahead of festivals, helping sectors like FMCG, auto, and housing. Analysts expect a 1–1.2% GDP boost over next 6 quarters.

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