GST 2.0: What Got Cheaper and What Got Costlier
In short: from 22 September 2025 India has four GST rates: 0% (nil or exempt), 5%, 18% and a new 40% rate for luxury and “sin” goods. The old 12% and 28% slabs were removed for almost all items. Most daily-use goods, insurance, cement, ACs and small vehicles became cheaper on paper. Big cars, big motorcycles and sugary drinks became costlier.
Hinglish me: 22 September 2025 se GST ke mukhya slab 5%, 18% aur 40% hain (nil bhi hai). 12% aur 28% slab lagbhag khatam. Insurance, paneer, roti, AC, TV, cement aur chhoti gaadi sasti hui. Badi gaadi, 350cc se badi bike aur cold drinks mehngi hui.
What exactly changed, and when
The 56th GST Council met in New Delhi on 3 September 2025 and recommended a simpler rate structure. The rate changes were then notified by the government on 17 September 2025 and took effect from 22 September 2025, the first day of Navratri. The GST Council’s own press release lists the individual HSN-wise changes; the table below is a plain-language summary of the changes that affect most households.
One practical point matters for bills and invoices: the rate depends on the date of supply. An invoice dated before 22 September 2025 still uses the old 12% or 28% rate. That is why our GST Calculator still keeps the older slabs available for old bills.
What got cheaper
| Item or category | Old GST rate | New GST rate |
|---|---|---|
| Individual life insurance and individual health insurance (including family floater and senior citizen plans) | 18% | Exempt (nil) |
| UHT milk, pre-packaged and labelled paneer/chena | 5% | Nil |
| Indian breads such as roti, chapati and paratha | 5% | Nil |
| Exercise books and notebooks | 12% | Nil |
| Hair oil, shampoo, toothpaste, toilet soap, shaving items | 18% | 5% |
| Medicines and most medical devices (remaining drugs and diagnostics) | 12% / 18% | 5% |
| Condensed milk and several dairy and processed food items | 12% | 5% |
| Fertiliser inputs such as sulphuric acid, nitric acid and ammonia | 18% | 5% |
| Air conditioners, dishwashers and televisions (all sizes) | 28% | 18% |
| Small cars and motorcycles up to 350 cc, three-wheelers | 28% | 18% |
| Cement | 28% | 18% |
| Buses, trucks and ambulances | 28% | 18% |
What got costlier
| Item or category | Old GST rate | New GST rate |
|---|---|---|
| Large cars and SUVs above the small-car limits (petrol up to 1,200 cc, diesel up to 1,500 cc, length up to 4 m) | 28% + cess | 40% |
| Motorcycles above 350 cc | 28% | 40% |
| Aerated drinks and other sweetened or flavoured beverages | 28% (aerated) / 18% (others) | 40% |
| Yachts and private aircraft | 28% + cess | 40% |
| Online money gaming and betting | Higher/special treatment | 40% |
| Coal, lignite and peat | 5% | 18% |
Tobacco products and pan masala are a special case because compensation cess is involved, so we have not listed them here. If you deal in them, check the latest notification directly.
How much does the price actually change?
A rate cut does not reduce the final price by the same number of percentage points. GST is added on top of the base price, so the real effect is a ratio. Moving from 18% to 5% does not mean “13% cheaper”; it means the final price can fall by about 11% at most.
| Rate change | Change in final price (if fully passed on) | Direction |
|---|---|---|
| 28% → 18% | −7.8% | Cheaper |
| 18% → 5% | −11.0% | Cheaper |
| 12% → 5% | −6.2% | Cheaper |
| 5% → 0% | −4.8% | Cheaper |
| 18% → 0% | −15.3% | Cheaper |
| 28% → 40% | +9.4% | Costlier |
| 18% → 40% | +18.6% | Costlier |
| 12% → 18% | +5.4% | Costlier |
| 5% → 18% | +12.4% | Costlier |
These are the maximum changes, assuming the seller passes the whole tax change on and nothing else moves. Here are worked examples using that same maths:
| Item | Price before GST | Old rate | New rate | Old price | New price | Change |
|---|---|---|---|---|---|---|
| Air conditioner | ₹40,000 | 28% | 18% | ₹51,200 | ₹47,200 | −₹4,000 |
| Small petrol car (tax-exclusive price, ignoring cess) | ₹6,00,000 | 28% | 18% | ₹7,68,000 | ₹7,08,000 | −₹60,000 |
| Bag of cement | ₹300 | 28% | 18% | ₹384 | ₹354 | −₹30 |
| Shampoo / hair oil / toothpaste / soap | ₹100 | 18% | 5% | ₹118 | ₹105 | −₹13 |
| Individual health insurance premium | ₹20,000 | 18% | 0% | ₹23,600 | ₹20,000 | −₹3,600 |
| Pre-packaged paneer | ₹100 | 5% | 0% | ₹105 | ₹100 | −₹5 |
| Aerated soft drink | ₹100 | 28% | 40% | ₹128 | ₹140 | +₹12 |
| Motorcycle above 350 cc (tax-exclusive price) | ₹2,50,000 | 28% | 40% | ₹3,20,000 | ₹3,50,000 | +₹30,000 |
Reading the table: an air conditioner with a tax-exclusive price of ₹40,000 cost ₹51,200 at 28% GST and ₹47,200 at 18%. That is a saving of ₹4,000, or about 7.8%, not the full 10 percentage points the headline suggests.
Why the price on the shelf may not fall by the full amount
- Old stock. Products already printed with an old MRP may sell at the old price until the stock clears, or carry a revised price sticker.
- Input tax credit. A business that could claim credit on inputs may see its own costs change in the other direction.
- Pricing decisions. Some companies pass on the whole benefit, some a part, and some adjust pack sizes instead.
- Cess and other levies. A few categories carried compensation cess, so the old total burden was higher than the headline slab.
The practical check is simple: look at the GST line on your bill and compare it with the rate that applies to that item today.
How to check the right rate for your product or service
- Find the HSN code (goods) or SAC code (services). It is printed on most supplier invoices.
- Look it up on the official GST portal or the CBIC notification list for the current rate.
- Check the invoice date. Supplies made before 22 September 2025 follow the old schedule.
- Use the calculator for the arithmetic: choose Add GST for a base price and Remove GST when you start from an MRP that already includes tax.
If you are working backwards from an MRP, divide by (1 + rate) rather than subtracting a percentage. For example, ₹590 including 18% GST has a base price of 590 ÷ 1.18 = ₹500, and the GST inside it is ₹90 (not ₹106.20). Our GST page walks through this mistake in detail.
Add or remove GST at 5%, 18% or 40%, with the CGST, SGST and IGST split. Old 12% and 28% slabs are included for bills before 22 Sept 2025.
Open GST CalculatorWhat this means for small businesses
If you issue invoices, update your billing software or price list so that the new rate is applied from the correct date, and keep the old rate for earlier invoices. If you hold stock bought at the old rate, ask your tax advisor how the transition is treated for your products. Credit rules and the treatment of closing stock depend on your registration type and the specific item.
If you are choosing between a loan and paying cash for a big purchase such as a car or AC, remember that the lower GST changes the amount you borrow. You can test this with the Car Loan EMI Calculator.
Sources and where to verify
- GST Council: Recommendations of the 56th Meeting (press release, 3 Sept 2025)
- GST portal (rate finder, notifications and HSN lookup)
- CBIC GST notifications
- GST Council website
This guide is for general information, not tax advice. Rates and exemptions are notified by the government and can change; always confirm the rate for your exact product or service on the official GST portal before invoicing or filing returns.
What are the GST slabs in India now?
Since 22 September 2025 the main rates are 5% (merit goods), 18% (standard rate) and 40% (luxury and sin goods), with 0% or exempt for items such as individual insurance, UHT milk and paneer.
Did the 12% and 28% slabs disappear completely?
For almost all items, yes. Goods and services were moved to 5%, 18% or 40%. A few special categories involving compensation cess, such as tobacco, are treated separately. Old invoices dated before 22 September 2025 still use the old rates.
Is health and life insurance really free of GST now?
The GST Council exempted individual life insurance and individual health insurance policies, including family floater and senior citizen plans, from 22 September 2025. Group policies and other products can be treated differently, so check your policy document.
How do I calculate the GST on a bill?
GST amount = base price × rate ÷ 100. Total = base price + GST. To remove GST from an MRP, divide the MRP by (1 + rate ÷ 100). The GST Calculator on this site does both.