New GST Slabs Announced! 35+ Items Just Got Cheaper

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1. GST 2.0 is Here: A Diwali Gift for the Middle Class

In a shocking and massive move that will bring significant relief to the middle class, the GST Council has approved a complete overhaul of the tax structure. The New GST Slabs are here, and the government is abolishing the 12% and 28% tax brackets entirely. This is the biggest tax reform since the initial implementation of GST and is being positioned as the “Diwali gift” that Prime Minister Narendra Modi had promised in his Independence Day speech.

This news is trending heavily as it will directly impact the monthly budget of every household in India. The changes, which will come into effect from September 22, 2025 (the first day of Navratri), are set to make a long list of everyday items, electronics, and even small cars significantly cheaper. This article provides a detailed and accurate breakdown of the New GST Slabs, the full list of items getting cheaper and costlier, and the overall impact on the Indian economy.

Hon’ble Prime Minister Shri @narendramodi announced the Next-Generation GST Reforms in his Independence Day address from the ramparts of Red Fort.

Working on the same principle, the GST Council has approved significant reforms today.

These reforms have a multi-sectoral and… pic.twitter.com/NzvvVScKCF

— Nirmala Sitharaman Office (@nsitharamanoffc) September 3, 2025

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2. Understanding the New GST Slabs

The current multi-tier GST structure (0%, 5%, 12%, 18%, 28%) is being simplified to a two-tier system to reduce complexity and disputes.

The Old Structure: 0%, 5%, 12%, 18%, 28%

The New Structure:

• 0% (No Change): Essential items like food grains, fresh fruits, and vegetables remain exempt.

• 5% (Standard Rate): For most essential goods.

• 18% (Higher Rate): For non-essential and luxury goods.

• 40% (Sin/Super Luxury Rate): A special high rate for a very small number of items.

How the Slabs Have Merged:

• The 12% slab is almost entirely merged into the 5% slab. 99% of items previously taxed at 12% will now be taxed at 5%.

• The 28% slab is completely merged into the 18% slab.

This simplification is a core part of the New GST Slabs reform.

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3. The Complete List: Over 35 Items That Are Now Cheaper

This is the most important part for consumers. The rationalization of the New GST Slabs means significant savings on a wide range of products.

Daily Use Items (Moving to 5%):

• Soap, Shampoo, Toothpaste, Hair Oil

• Namkeen, Biscuits, Fruit Juices

• Mobile Phones

Electronics & White Goods (Moving from 28% to 18%):

• Televisions (TVs)

• Air Conditioners (ACs)

• Refrigerators

• Washing Machines

• Cement

Automobiles (Moving from 28% to 18%):

• Small Cars (Petrol < 1200cc, Diesel < 1500cc)

• Motorcycles (< 350cc)

• Buses and Trucks

• Auto Parts

Services (Major Relief):

• Health and Life Insurance: GST has been completely removed (from 18% to 0%).

• Hotel Stays (< ₹7,500 per night): GST reduced from 12% to 5%.

• Gyms, Salons, Beauty Parlors: GST reduced from 18% to 5%.

• Medical Devices: GST reduced from 18% to 5%.

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4. Which Items Will Get More Expensive?

To balance the revenue loss from these cuts, a special 40% slab has been created for “sin” and “super-luxury” goods.

• Tobacco Products: Cigarettes, Pan Masala, Gutkha (will also have a high compensation cess).

• Sugary Caffeinated Beverages: Carbonated drinks like Coke and Thums Up.

• Large Luxury Cars & SUVs: Cars with engines larger than 1500cc and longer than 4 meters, like a Toyota Fortuner.

• Betting, Casinos, Gambling: These will also be moved from 28% to the 40% slab.

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5. The Impact on the Indian Economy and Government Revenue

While the New GST Slabs are a huge relief for consumers, they are expected to cause a significant revenue loss for the government.

• Estimated Loss: The government could face a revenue loss of $16 to $20 billion (around ₹1.5 to ₹2 lakh crore), which is about 0.6% to 0.8% of the GDP.

How the Government Plans to Cope:

• Compensation Cess: The extra cess collected from the 40% slab items will be used to compensate states for any revenue loss.

• Increased Consumption: The government is betting that lower prices will lead to a massive boost in consumption. Since consumption contributes to 60% of India’s GDP, this could lead to higher overall economic growth and job creation.

• Better Tax Compliance: Simpler and lower tax rates are expected to encourage more businesses to pay taxes honestly, which could offset the revenue loss.

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6. Conclusion: What This Means for Your Wallet

During my Independence Day Speech, I had spoken about our intention to bring the Next-Generation reforms in GST.

The Union Government had prepared a detailed proposal for broad-based GST rate rationalisation and process reforms, aimed at ease of living for the common man and…

— Narendra Modi (@narendramodi) September 3, 2025

The introduction of the New GST Slabs is arguably the most significant pro-consumer move by the government in recent years. It will lead to direct savings on your monthly budget, from your shampoo and biscuits to your next AC or small car purchase. While there is a risk of revenue loss for the government in the short term, the long-term bet is on boosting consumption and simplifying the tax system to fuel a new cycle of economic growth. For the Indian middle class, this is a festive season that has truly come early.

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FAQ

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Sources:

1. Youtube
2. GST Council Official Website
3. Press Information Bureau (PIB) India