Dear candidates, GST refers to Goods and Services Tax. The concept of GST was initially suggested in 2000, leading to the formation of an Empowered Committee of State Finance Ministers to examine sales tax reforms. The Goods and Services Tax (GST), brought into effect by the 101st Constitutional Amendment Act in 2016, was implemented in India on July 1, 2017, marking a significant transformation in the country’s indirect tax system by replacing the earlier complicated framework of central and state taxes with a unified tax model. More than six years after its launch, India is transitioning towards GST 2.0, which aims to enhance the system to be more robust, technology-oriented, and user-friendly for taxpayers. GST is imposed at various rates (0%, 5%, 12%, 18%, and 28%) and is overseen by the GST Council, which is a collaborative body of the Centre and States. This significant reform has streamlined India’s tax architecture, minimised the cascading effects of taxes, enhanced compliance, and is continuously evolving with consistent updates and rate changes. This page provides comprehensive details about the new GST rates list 2025, including its objectives, features, sector-wise impacts, and top 30 MCQs for competitive exam preparation. For any questions, please refer to the FAQs provided below.

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New GST Rates 2025 List PDF Download

Candidates can download the New GST Rates List 2025 PDF from the link below.

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GST 2.0

Although GST simplified taxation, problems such as compliance complexity, revenue leakage, input tax credit mismatches, and refund delays remained. GST 2.0 aims to tackle these issues by using technology, data analytics, and automation to improve transparency and make doing business easier.

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Transforming India’s Indirect Tax Landscape

During the 56th GST Council meeting, chaired by Union Finance Minister Smt. Nirmala Sitharaman has approved Next-Generation GST reforms aimed at improving citizens' lives and making business easier for everyone, including small traders and entrepreneurs. In his Independence Day speech, Prime Minister Narendra Modi announced that these reforms would help lower the tax burden on ordinary people, calling them a “Diwali gift” for the country. He emphasised that the reforms would benefit farmers, MSMEs, women, youth, and middle-class families, supporting India’s long-term economic growth. GST replaced 17 taxes and 13 cesses with a single, unified tax, ending tax-on-tax cascading. It created a common national market with uniform rates and procedures, simplified compliance, and enhanced transparency, symbolising the country’s economic integration.

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GST 2.0 Objective and Features

The Next-Generation GST reforms aim to streamline the tax system, offer relief to the common people, and stimulate business growth. Launched as a major pro-growth and pro-people initiative effective from September 22, 2025, the reforms update the current GST structure, which has a four-tier rate system of 5%, 12%, 18%, and 28%. This change minimises classification disputes and lowers compliance burdens for businesses. The new simplified tax system replaces the multi-tiered rates with two slabs: 5% and 18%, eliminating the previous 12% and 28% rates. Additionally, a 'sin tax' of 40% is introduced on luxury goods and products harmful to health, like tobacco, pan masala, aerated drinks, and high-end cars. Many goods and services also see substantial tax reductions to enhance affordability.

New GST Rates 2025

Here is the new Goods and Services rate list 2025 sector wise. 

1. Common Households

• Products like Ultra-High Temperature (UHT) milk, Pre-packaged and labelled chena or paneer, and all the Indian Breads will see NIL rates

• Household goods like soaps, shampoos, toothbrushes, toothpaste, tableware, and bicycles are now at 5%.

• Food items such as packaged namkeens, Bhujia, Sauces, Pasta, Chocolates, Coffee, Preserved Meat, etc., reduced from 12% OR 18% to 5%

• Consumer durables: TVs (LCD/LED) (> 32’), ACs, dishwashers: from 28% to 18%.

2. Healthcare

• 33 life-saving drugs, diagnostic kits: from 12% to 0%.

• Other medicines, including Ayurveda, Unani, and Homoeopathy, have decreased from 12% to 5%.

• Spectacles and corrective goggles: from 28% to 5%.

• Medical oxygen, thermometers, and surgical instruments: from 12–18% to 5%.

• Medical, dental, and veterinary devices cut from 18% to 5%.

3. Middle-Class & Consumer Durables

• Two-wheelers, small cars, TVs, ACs, and dishwashers are reduced from 28% to 18%.

4. Housing and Construction

• Cement is drastically cut from 28% to 18%, aiming to lower home and infrastructure costs.

• Marble/travertine blocks, Granite blocks, Sand-lime bricks: from 12% to 5%

• Bamboo flooring/joinery, Packing cases & pallets (wood): from 12% to 5%

5. Agriculture

• Tractors, harvesters, and irrigation equipment have been reduced from 12% to 5% to lower farming costs.

• Tractors: from 12% to 5%; tires and parts: from 18% to 5%.

• Harvesters, threshers, sprinklers, drip irrigation, poultry & bee-keeping machines: from 12% to 5%.

• Bio-pesticides and natural menthol: from 12% to 5%.

6. Services

• Hotel stays (up to Rs. 7,500/day), gyms, salons, and yoga services are reduced from 12-18% to 5%.

7. Textiles & Handicrafts

• Rates on man-made fibres, yarn, handicrafts, and toys are reduced to 5% to support artisans and exports.

8. Insurance

• GST is exempted (0%) on premiums for individual life and health insurance policies.

9. Education

• Education has become more affordable with exercise books, erasers, pencils, crayons and sharpeners moving to 0%.

• Geometry boxes, school cartons, trays: from 12% to 5%.

10. PopCorn

• Pre-Reform Complexity: Previously, popcorn was taxed at different rates (12% and 18%) based on preparation and branding, creating a complex classification system prone to disputes.

• Post-Reform Simplicity: All popcorn variants—whether loose or branded, savoury or sweet—are now uniformly taxed at 5%.

11. Automobile Sector

• Small cars, two-wheelers ≤350cc: from 28% to 18%.

• Buses, trucks, three-wheelers, and all auto parts: from 28% to 18%.

12. Businesses

• Reduced compliance burden, simplified tax rates, and automated processes enhance operational efficiency.

13. Government

• Increased tax revenue collection due to reduced evasion and leakage.

14. Consumers

• More transparent pricing and better governance of the goods and services market.

Top 30 MCQs Based on GST 2.0

1. What is the core objective of the Next-Generation GST reforms (GST 2.0)?

Explanation: The primary goal is to simplify the tax system, provide relief to the common man, and boost businesses. It is designed as a major pro-growth and pro-people overhaul.

2. When was the original GST introduced in India?

Explanation: The Goods and Services Tax was launched on 1st July 2017, replacing a complex web of multiple central and state taxes.

3. What is the new effective date for the implementation of the GST 2.0 reforms?

Explanation: The revised rates and new structure will become officially operational from 22nd September 2025.

4. Who chairs the GST Council meetings?

Explanation: The Union Finance Minister presides over the council meetings, which include state finance ministers.

5. Which category of goods will be taxed at the new highest rate of 40%?

Explanation: The new 40% slab targets luxury and sin goods (e.g., tobacco, pan masala, aerated drinks, high-end cars)to ensure revenue balance.

6. What was the previous GST rate on cement, and what is its new rate?

Explanation: Cement, a key construction material, has been drastically reduced from 28% to 18%to lower the cost of housing and infrastructure.

7. What is the new GST rate for hotel stays costing up to ₹7,500 per day?

Explanation: To boost the hospitality sector and reduce costs for citizens, the rate for these hotel stays has been cut to 5%.

8. What major change has been introduced for individual insurance premiums?

Explanation: To expand financial protection, GST on premiums for individual life and health insurance policies has been exempted (0%).

9. Why was the tax reform on popcorn considered significant?

Explanation: It was a key example of simplification, as all variants (salted, branded, caramel) were aligned under a single, lower tax rate of 5%, eliminating classification disputes.

10. What is the new GST rate for common consumer durables like TVs, ACs, and dishwashers?

Explanation: These items have been moved from the highest slab to make them more affordable for the middle class, now taxed at 18%.

For more questions, refer to the PDF above.

FAQs

Q: What is GST 2.0, and why was it introduced?

GST 2.0 is the Next-Generation Goods and Services Tax reform launched on September 22, 2025. It was introduced to simplify the existing GST structure, reduce compliance burdens, prevent revenue leakage, and make the tax system more transparent and business-friendly.

Q: What are the key changes in GST 2.0 compared to the earlier system?

The earlier four-tier GST rate system (5%, 12%, 18%, 28%) has been replaced with two slabs: 5% and 18%. Additionally, a 40% sin tax has been introduced on luxury and harmful goods like tobacco, pan masala, aerated drinks, and high-end cars.

Q: How does GST 2.0 benefit common people and businesses?

GST 2.0 reduces tax rates on essential goods, medicines, agricultural equipment, and services like education and healthcare. For businesses, it simplifies compliance, minimises classification disputes, and reduces operational costs, thereby improving ease of doing business.

Q: Which sectors are most positively impacted by the GST 2.0 reforms?

Key beneficiaries include:

• Households: Daily-use items like soaps, shampoos, and food products are now taxed at lower rates.

• Healthcare: Life-saving drugs and medical devices see reduced or NIL GST.

• Agriculture: Tractors, harvesters, and irrigation tools now have just 5% GST.

• Education: Books, stationery, and learning materials have moved to 0% or 5%.

• Housing & Infrastructure: Cement and construction materials have become more affordable.