New GST Rates in India (2025): Comprehensive Update & Business Impact

From 22 September 2025: What you must know about revised GST slabs, HSN classifications and compliance for goods & services

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What’s Changing in India’s GST System?

The Indian Government has introduced updated GST rates for various goods and services, effective from 22 September 2025. These changes affect pricing, invoicing, compliance and profitability for businesses of all sizes — especially MSMEs, retailers and service providers.

Understanding the GST Framework

GST (“Goods & Services Tax”) in India replaced many indirect taxes by consolidating them under a single tax system for both goods and services.

Key GST components:

• CGST (Central Goods & Services Tax) – for intra-state sales by central government
• SGST (State Goods & Services Tax) – for intra-state sales by state government
• IGST (Integrated Goods & Services Tax) – for inter-state sales by the central government

The main tax slabs (pre-and post-reform)

• Exempt (0 %) – daily essentials such as fresh produce
• Lower slab (5 %) – basic goods and services
• Standard slab (18 %) – many common goods/services
• Luxury/sin items (upto 40 %) – luxury vehicles, sin goods, etc.

Updated GST Rates (from 22 Sept 2025)

Here’s a snapshot of changes in selected HSN (Harmonised System of Nomenclature) chapters:

• Live animals, bovine/poultry: 5% → 0% (e.g., UHT milk, paneer now tax-free)
• Meat & edible offal: 5% → 0% (essential food)
• Fish meat & fillets: 5% → 0%
• Eggs/honey/milk products: 5-12% → 0-5% (butter/ghee/cheese at 5%)
• Chocolate & cocoa: 18% → 5% (cheaper sweets)
• Packaging containers: 12% → 5% (relief for packaging cost)
• Apparel/Clothing: e.g., ≤₹2,500 → 5%; >₹2,500 → 18%
• Vehicles: small cars 28% → 18%; luxury cars 40% (with cess)
• Aerated drinks / carbonated beverages: 28% + cess → 40% (sin items higher)
• Precious metals/jewellery: 3% unchanged

Read More : To learn what is GST and how it perform

Changes in GST Rates HSN-wise

For a detailed view of GST rates by HSN chapter, including the HSN codes, new GST rates, and previous rates, refer to the comprehensive GST Rate List 2025 with HSN codes provided below

HSN Chapter No.	Chapter Name	Old GST Rate	New GST Rate (Effective Sept 22, 2025)	Notes
1	Live Animals, Bovine & Poultry	5%	0%	UHT milk, paneer, roti, khakra now tax-free.
2	Meat & Edible Offal of Animals	5%	0%	Essentials exempt.
3	Fish Meat & Fillets	5%	0%	Fresh seafood exempt.
4	Eggs, Honey & Milk Products	5–12%	0–5%	Condensed milk exempt, butter/ghee/cheese at 5%.
17	Sugar, Jaggery, Honey & Bubble Gums	5–18%	5%	Sugar steady, chocolates shifted to 5%.
18	Chocolate & Cocoa Products	18%	5%	Chocolates much cheaper.
19	Pizza, Cake, Bread, Pasta & Waffles	12–18%	5%	Bread, pizza base, pasta now under 5%.
22	Water – Mineral & Aerated	18%–28%	18%–40%	Aerated drinks hiked to 40%.
30	Drugs & Pharmaceuticals	12%	0–5%	Life-saving drugs exempt, others at 5%.
33	Essential Oils, Beauty Products	18%	5%	Shampoos, powders, hair oils down to 5%.
34	Soaps, Waxes, Polish Products	18%	5%	Household cleaning cheaper.
40	Rubber, Plates, Condensed Milk (mixed items)	12–18%	5–18%	Industrial rubber unchanged, food-related shifted down.
61–62	Apparel & Clothing	12%	5% up to ₹2,500, 18% above	Budget wear cheaper, premium costlier.
64	Shoes & Footwear Products	18%	5% up to ₹2,500, 18% above	Mesh/sports shoes under ₹2,500 at 5%.
71	Pearls, Diamonds, Gold, Platinum	3%	3%	No change.
86	Railway Locomotives & Parts	12%	5%	Railway equipment cheaper.
87	Tractors & Motor Vehicles	28%	18–40%	Small cars at 18%, luxury cars/bikes at 40%.
90	Medical, Chemical & Astronomy	12%–18%	0–5%	Medical kits, bandages now 5% or Nil.
92	Musical Instruments	18%	18%	No change.
94	Furniture, Bedding & Lighting	18%	18%	No change.
95	Children Toys, Table & Board Games & Sports Goods	12–18%	12–18%	No major change.
98–99	Services	5–28%	Mostly unchanged	Telecom 18%, online gaming/betting hiked to 40%.

What it Means for Businesses

• Pricing Strategy: When GST rates drop, you can consider reducing prices (or maintaining margin and improving competitiveness). When rates rise (or stay high), cost gets passed on unless absorbed.
• Invoicing & Billing: From 22 Sept 2025, all invoices must reflect these new GST slabs. Using older rates may create non-compliance, input tax credit issues.
• Cash Flow & Credit Impact: Input tax credit, vendor bills and accounting entries must align with the updated rates — otherwise your cash flow and tax filing could get affected.
• Sectoral Impact: Some sectors will benefit (basic goods, packaging, apparel under threshold) and some will feel strain (luxury cars, sin goods, premium services).

How to Stay Compliant

• Ensure your accounting/billing software is updated with new GST rate tables.
• Cross-check your supplier/vendor bills to confirm correct GST rate applied.
• Train your finance/sales teams about the new slabs and classification changes (HSN lines).
• Monitor official GST notifications for any further changes or phased implementation.

Final Takeaway

The revised GST slabs bring meaningful changes across product categories in India. For businesses the key is to adjust pricing, update invoicing, and ensure accounting systems reflect the new structure — failure to do so can lead to compliance risks and margin erosion.

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