GST Council Approves Two-Slab Structure: What Gets Cheaper, What Gets Costlier

GST Council Approves Two-Slab Structure: What Gets Cheaper, What Gets Costlier

Last Updated Sep - 04 - 2025, 10:34 AM | Source : Fela News

GST revamped: 5% and 18% slabs introduced; essentials cheaper, select luxury and sin goods now costlier.

In a major move toward tax simplification, the GST Council has approved a sweeping overhaul of India’s indirect tax structure. Gone are the days of four confusing slabs. Now, from September 22, 2025, most goods will fall under either 5 % or 18 %, while a special 40 % slab will be levied on luxury and sin goods like tobacco, ultra-luxury vehicles, and aerated drinks.

For everyday life, this is good news. Items that are part of the common Indian household such as packaged food, personal care products, medicines, and beverage essentials will now be taxed at just 5 %. Even better, staples like Indian breads, UHT milk, paneer, and certain medicinal drugs have now become GST-exempt, moving to a 0 % rate. Expect items like shampoo, toothpaste, butter, ghee, home appliances, and entertainment devices to get a welcome tax cut to 18 %, down from previously higher slabs.

On the flip side, not everything got more wallet-friendly. The Council introduced a new 40 % "sin tax" slab targeting items considered harmful or luxurious think cigarettes, pan masala, luxury cars, and aerated drinks. Its purpose was not only to discourage consumption, but also to increase revenue from high-level areas.

Prime Minister Narendra Modi appreciated this reform and described its benefits as important for farmers, MSMEs, traders and middle class, as well as a strong promotion step of the economy.

Actually, this improvement brings double win: to make expenses easier for general consumers and homes, while controlling luxury consumption with more tax. It is a thoughtful step towards equality, independence and a more vibrant and inclusive economic future.

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