ABOUT NEW GST REGIME

 New Slabs & Structure

• The main GST slabs now are 0% (exempt), 5% (reduced rate), 18% (standard rate) and 40% (luxury / sin goods). 

• The earlier 12% and 28% slabs have largely been eliminated or merged under the 5%/18% structure. 

• Items such as cigarettes, chewing tobacco, pan-masala and some luxury goods will continue under higher rates or separate treatment for now. 

📝 Key Notes for Compliance & Business

• The rate change is effective from 22 September 2025. 

• For transactions where advance payment was made or contract signed before this date, special rules apply to determine which rate is applicable — businesses should check the official notifications. 

• Even with lower rates, businesses must continue to follow other GST compliance: registration, invoices with correct HSN/SAC codes, input tax credit rules, etc.

• The move is aimed at reducing tax burden on common items while maintaining higher incidence on luxury/sin goods, and simplifying the tax slabs.

• Key Highlights of the Rate Changes

  • At the GST Council’s 56th meeting (3 Sept 2025) it was decided that the new rate structure will largely be simplified to two primary slabs: 5% and 18%, plus a higher rate of 40% for select “luxury/sin” goods. 

  • The changes will be implemented from 22 September 2025 for most goods and services. 

  • Some goods — notably certain tobacco products, pan masala, chewing tobacco, etc — are excluded from the immediate implementation; their rates will continue under the old structure until further notice. 

  ---

  ✅ What Gets Cheaper

  • Everyday household items like soaps, shampoos, oral-care items, biscuits, packaged foods have their GST rates reduced (for many, from 12% or 18% down to 5%). 

  • Healthcare/medical items (life-saving drugs, diagnostic kits) have moved to Nil or a lower 5% rate. 

  • Automobiles with smaller engine capacity (e.g., petrol cars ≤1200 cc) and many consumer durable goods (like TVs, ACs) have seen tax cuts (e.g., 28% → 18%). 

  ---

  ❗ What Gets More Expensive / Special Treatment

  • Goods deemed “luxury” or “sin” items — premium cars, large motor-cycles, aerated drinks, pan masala, etc — are moved to the new 40% slab. 

  • For specific items (like tobacco & allied), the transition will happen later, pending fulfilling certain fiscal obligations (compensation cess debt) so existing rates continue for now. 

  ---

  🔍 Implementation / Compliance Notes

  • If you’ve booked goods or got advances before 22 Sept 2025 but supply happens after, special rules determine which rate applies. 

  • When rates go down (say an item from 12% → 5%), input tax credits (ITC) already taken on earlier purchases remain usable — but new outward supplies from the date will get the new rate. 

  • For imported goods, the new rates will apply via IGST from that date unless separately exempted.