GST Explained: A Quick Guide to New Tax Rules

Quick summary

• GST Rate Changes Approved: The GST Council, led by Finance Minister Nirmala Sitharaman, announced a major overhaul of tax rates during its 56th meeting. Effective from September 22, 2025, tax slabs are consolidated into two categories-5% and 18%.

• Domestic Spending Focus: Most personal-use items like hair oil, TVs, life insurance policies, corn flakes, and health products will see reduced rates to boost domestic consumption amidst global economic challenges.

• Medicals and Daily Goods: Medicines are taxed at a concessional rate of 5%.Common household items like soap bars (5%), shampoos (simplified to avoid complexity), dental hygiene goods like toothpaste also attract lower taxes.

• Automotive Sector Impact: Small petrol/LPG cars (<1200 cc) now have an 18% GST rate down from the previous 28%. Mid-to-large vehicles (>1500 cc) attract a flat rate of 40%,removing cess layers.

• Luxury Services and Miscellaneous Items Taxed Higher: Betting activities including online gaming face highest slab (40%) whereas fitness clubs/Yoga services reduced simpler bracket reforms added clarity replacement cleansing barriers avds non-complex taxaspects(EXPUNGE).

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