GST Revamp 2025: What Gets Cheaper, What Gets Costlier?

Key Highlights of the GST Revamp

• Simplified Structure: Four slabs reduced to two – 5% and 18%.

• Special 40% Rate: For luxury, sin goods, and certain leisure services.

• Focus on Essentials: Lower rates for food, healthcare, farming, and household items.

• Boost for Industry: Construction, auto, and agriculture sectors see major tax relief.

What Gets Cheaper?

1. Food & Beverages

Consumers will enjoy relief on everyday essentials:

• Nil tax on chapati, paranthas, paneer, UHT milk, pizza bread, and khakra.

• Butter, ghee, dry fruits, jam, jellies, biscuits, pastries, ice cream, fruit juices, cereals, and namkeen reduced to 5% (earlier 18%).

• Plant-based milk and soya drinks now just 5%.

2. Household Goods

Daily-use items like shampoos, soaps, toothpaste, hair oil, feeding bottles, utensils, bicycles, bamboo furniture, and umbrellas now taxed at 5% instead of 12–18%.

3. Electronics & Appliances

Consumer durables such as air-conditioners, dishwashers, and TVs move down to the 18% slab from the earlier 28%.

4. Stationery Products

Learning and educational materials become cheaper: notebooks, pencils, crayons, charts, maps, and globes are tax-free. Erasers also exempted from GST.

5. Footwear & Textiles

Mass-market footwear and clothing, earlier at 12%, are now at 5%, giving relief to millions of consumers.

6. Healthcare Essentials

A major boost to health spending:

• Life-saving drugs, oxygen, diagnostic kits, thermometers, glucometers, and spectacles reduced to 5% or nil.

• Individual health and life insurance policies now exempt from GST.

7. Hotels & Travel

• Hotel stays up to ₹7,500 per night cut to 5% (earlier 12%).

• Economy flight tickets taxed at only 5%.

8. Vehicles & Auto Components

• Motorcycles up to 350 cc now at 18% (earlier 28%).

• Small hybrid and electric vehicles continue at 5%.

• Auto parts moved to 18% from 28%.

• Petrol, diesel, LPG, and CNG vehicles in smaller categories now taxed at 18%.

9. Construction & Agriculture

• Cement down to 18% from 28%.

• Fertilizers, pesticides, agricultural machinery, and tractor parts cut to 5%.

• Sewing machines and agricultural tools now cheaper.

10. Services & Wellness

Beauty and fitness services such as salons, gyms, yoga centres, and spas taxed at 5% without input tax credit, down from 18%.

What Gets Costlier?

1. Aerated & Caffeinated Drinks

• Soft drinks like Coca-Cola, Pepsi, and energy drinks will now attract 40% GST (up from 28%).

• All sweetened and flavoured beverages also taxed at 40%.

2. Automobiles & Luxury Vehicles

• Cars above 1,200 cc and motorcycles above 350 cc now fall under the 40% slab.

• Yachts, racing cars, and private aircrafts also become more expensive.

3. Tobacco Products

• Tobacco continues at 28% GST plus cess, until pending state compensations are cleared.

• Afterward, it will be subject to 40% GST.

4. Leisure & Gaming

• Casinos, online money gaming, horse racing, lotteries, and even IPL tickets will now attract a 40% GST rate.

Why It Matters

This reform is more than just a tax adjustment. It reflects a shift towards affordability of essential goods and services while discouraging the consumption of luxury and sin goods. Households will feel the direct benefits in their grocery, healthcare, and travel expenses, while industries such as construction, agriculture, and small-scale manufacturing will gain significant relief.

At the same time, luxury consumption and harmful products will bear a heavier tax burden, aligning with the government’s long-term economic and social goals.

Final Takeaway

The GST Revamp 2025 is expected to bring much-needed relief for the average consumer and boost domestic demand. Essentials like food, medicines, transport, and household products are becoming more affordable, while high-end vehicles, tobacco, and entertainment services will cost significantly more.

This dual-rate GST structure will likely make compliance easier for businesses, while also ensuring a fairer and more consumer-friendly tax system.