Under the GST 2.0 reforms effective September 22, 2025, numerous everyday items, electronics, and services have seen reduced GST rates, with many moving to 5%, 18%, or zero, aimed at lowering costs for consumers. Key reductions include daily essentials, consumer electronics, and health-related products.
GST on two-wheelers (≤350cc) and small cars cut from 28% to 18%, enhancing youth mobility. GST on cement reduced from 28% to 18%, lowering housing and infrastructure costs. Healthcare made affordable with GST on medicines cut to 5%/Nil, while health insurance is made exempted from GST.
Books, maps, newspapers, journals, non-judicial stamps, postal items, live animals (except horses), beehives, human blood, semen, bangles, chalk sticks, contraceptives, earthen pots, props used in pooja (including idols, bindi, kumkum), kites, organic manure, and vaccines.
The applicable GST rate is 18%.
Key Categories of Goods under 40% GST Slab
GST-Free Items:
Understanding GST Rate Reduction
Starting September 22, 2025, the GST Council reduced the number of tax slabs from four to two main rates: 5% merit rate for essential and priority items and 18% standard rate for most other goods and services. There is also a special 40% rate for luxury and sin goods.
If you only have G.S.T, which is 7%, then you would calculate the price after taxes by multiplying by 1.07. So a $200 item would cost 1.07 x $200 = $214 after G.S.T. To calculate how much G.S.T. was paid on a $214 item, simply reverse the calculation by dividing by 1.07, as $214/1.07=$200.
The GST/HST break includes certain qualifying goods, such as:
Fresh fruits, fresh milk, curd, bread, etc. Exports and supplies made to SEZ units or SEZ developers, of both goods and services. Grains, salt, jaggery, etc. Alcohol used for human consumption, natural gas, petrol and its products, etc.
Zero-rated supplies are supplies of property and services that are taxable at the rate of 0%. This means there is no GST/HST charged on these supplies, but GST/HST registrants may be eligible to claim ITCs for the GST/HST paid or payable on property and services acquired to provide these supplies.
All auto parts now attract a uniform 18% GST, while small cars, motorcycles (≤ 350 cc), and goods transport vehicles will now be taxed at 18% instead of 28%.
Effective September 22, 2025, India implements revised GST rates on apparel. Clothing priced between Rs 1,000 and Rs 2,500 will benefit from a reduced 5% GST, while items exceeding Rs 2,500 will be taxed at 18%.
Beverages containing milk GST reduced from 12% to 5% Ice cream – GST reduced from 18% to 5% Milk cans – GST reduced from 12% to 5%
Common GST/HST Mistakes
Understanding the Goods and Services Tax (GST)
The goods and services tax (GST) is an indirect federal sales tax that is applied to the cost of certain goods and services. The business adds the GST to the price of the product, and a customer who buys the product pays the sales price inclusive of the GST.
Key categories have seen rate reductions: daily essentials have dropped from 12%/18% to 5%, agricultural equipment from 12%/18% to 5%, healthcare services to 5% or exempt, and education services are now fully tax-exempt.
For any standard-rated supplies of goods or services that you make on or after 1 Jan 2024, you must charge GST at 9%. For instance, if you issue an invoice and receive payments for your supply on or after 1 Jan 2024, you must account for GST at 9%.
Types of GST in India
CGST (Central Goods and Services Tax) SGST (State Goods and Services. IGST (Integrated Goods and Services Tax) UTGST (Union Territory Goods and Services Tax)
Main GST-free products and services
Certain goods and services are exempt from GST due to their essential nature. This exemption applies based on the type of supply, not the supplier. Example: Healthcare services, educational services, and public utility services (e.g., water supply) are exempt from GST.
Office supplies, equipment, rental costs, and professional services are examples of expenses on which input tax can be claimed. Further, input tax cannot be claimed on the following expenses: private use, non-business entertainment, and motor vehicle expenses.