New GST Slab 2025-26 FAQs: When Will The New Rate Come Into Effect? All Questions Answered

The Goods and Services Tax (GST) Council has approved a sweeping reform of India's consumption tax system, the most significant since GST was introduced in 2017. This revamp includes major rate cuts on everyday essentials such as medicines, household items, small cars, and appliances, with broader impact across sectors including personal care, insurance, agriculture, and construction.

To simplify the tax structure and stimulate domestic demand, especially in light of recent U.S. tariffs on Indian the Council has consolidated the existing four-tier GST system (5%, 12%, 18%, and 28%) into just two primary slabs: 5% and 18%.

In addition, a special 40% rate will apply to select luxury and sin goods, including high-end automobiles, tobacco products, and cigarettes.

GST Rate Overhaul 2025 - Frequently Asked Questions

When will the new GST rates take effect?
The revised GST rates will be effective from September 22, 2025, for all goods and services except pan masala, gutkha, cigarettes, chewing tobacco (like zarda), unmanufactured tobacco, and bidi.

Do e-way bills need to be reissued for goods in transit?
No. E-way bills already in transit will remain valid for their original duration. There's no need to cancel or regenerate them due to the rate change.

What are the new GST rate slabs?
The GST Council has simplified the structure:
- Old slabs: 5%, 12%, 18%, and 28%
- New slabs: Only 5% and 18%
- A special 40% slab will apply to select luxury and sin goods like high-end cars, tobacco, and cigarettes.

Which items will see reduced GST rates?
The overhaul slashes duties on:
- Household essentials (e.g., toothpaste, appliances)
- Medicines
- Small cars
- Insurance
- Tractors and cement
This move aims to boost domestic consumption and offset the impact of US tariffs on Indian exports.

Why is there a 40% GST rate on certain non-alcoholic beverages?
To maintain consistency and avoid classification disputes, similar goods are grouped under the same rate. Some non-alcoholic beverages now fall under the 40% slab to align with this principle.

Why were GST rates revised for Indian breads?
Previously, plain bread was exempt, but variants like pizza bread, roti, porotta, and paratha had different rates. Now, all Indian breads are exempt, ensuring uniformity across similar products.

Why did the GST rate increase for carbonated fruit drinks?
Earlier, these drinks had both GST and a compensation cess. With the cess removed, the GST rate was increased to maintain the same overall tax burden.

Why is paneer taxed differently from other cheeses?
Paneer (Indian cottage cheese) sold unpackaged was already exempt. The change now applies only to pre-packaged and labelled paneer, supporting small-scale producers and promoting traditional Indian dairy.

What is the GST rate for admission to sporting events?
- Tickets ≤ ₹500: Exempt from GST
- Tickets > ₹500: Taxed at 18% This applies to all sporting events except high-profile ones like the IPL.

What Gets Cheaper?

• UHT milk: Now tax-free.
• Milk products (condensed milk, ghee, butter, paneer, cheese): Reduced from 12%-18% to 5%.
• Namkeens, bhujia, chabena: Reduced from 18% to 5%.
• Dry fruits (almonds, pistachios, hazelnuts, cashews, dates): Reduced from 12% to 5%.
• Refined sugar, syrups, confectionery: Reduced to 5%.
• Packaged foods (vegetable oils, animal fats, meat preparations, etc.): Reduced to 5%.
• Staple foods (malt, starches, pasta, cornflakes, biscuits, chocolates, cocoa products): Reduced from 12%-18% to 5%.
• Water (without artificial sugar/sweeteners): Reduced from 18% to 5%.
• Fertilisers and agricultural inputs: Reduced to 5%.
• Life-saving drugs, health products: Reduced to 5% or nil.
• Educational services and items: Reduced to 5% or nil.
• Hair oil, shampoo, dental floss, toothpaste: Reduced from 18% to 5%.
• Footwear and textiles: Reduced to 5%.
• Select electrical appliances: Reduced to 18%.
• Cars (petrol/diesel): Reduced from 28% to 18% for specific engine sizes.
• Renewable energy devices, sports goods, toys, leather/handicrafts/wood products: Reduced to 5%.
• Air conditioners, dishwashing machines: Reduced from 28% to 18%.

What Gets Costlier?

• Goods with added sugar/sweeteners: Increased from 28% to 40%.
• Cigarettes, pan masala, tobacco, gutkha: Remain at existing GST slab rates.
• Luxury goods: Now at 40%.
• Coal: Increased from 5% to 18%.
• TV sets: Now at 18%.
• Big cars and bikes (>350cc): Now at 40%.