New GST Rates Announced: What Changes From September 22
The GST Council, led by Finance Minister Nirmala Sitharaman, has rolled out a major tax reform, effective September 22. After months of anticipation, the decision brings India’s indirect tax structure into a simplified two-tier slab system. For businesses, investors, and households, these new GST rates will set the tone for pricing and consumption patterns in the months ahead.
What Happened at the GST Council Meeting?
The GST Council meeting today finalised a revised structure with two primary slabs: 5% and 18%. Luxury and sin goods such as cigarettes, aerated drinks, and high-end vehicles will attract a higher 40% GST slab, including cess where applicable. At the same time, health insurance and life insurance premiums have been exempted from GST, reducing out-of-pocket costs for households.
Why This Matters
For the common man, this means everyday items like packaged foods and essentials remain in the 5% bracket, while durable household goods fall in the 18% slab. For investors tracking the Economic Times style of market analysis, the focus will be on how these tax shifts affect consumer demand, stock performance in the FMCG, insurance, and auto sectors, and broader GST reforms 2025.
Government Response
Finance Minister Nirmala Sitharaman highlighted that these changes mark the beginning of Next Gen GST reforms. The move to a simplified slab system aims to make compliance easier for businesses while also giving relief to families through reduced costs on healthcare coverage. According to government officials, this is part of the long-term roadmap towards GST 2.0.
Impact on Daily Life
From insurance buyers to home builders, the revised rates touch almost every sector. Premiums on health and life insurance now come with 0% GST, making protection more affordable. On the other hand, those purchasing cement or luxury cars may notice higher costs as these remain under the upper brackets. For gold buyers, the government is expected to issue a detailed notification, but early signs suggest adjustments in gold GST rate may follow.
GST New Rate List (Quick Reference)
This quick reference covers the new GST slabs, effective from the announced implementation date. Use it as a handy guide for day-to-day decisions. Categories are indicative; final HSN-wise mapping will appear on invoices/official notifications.
| Category / Item | New GST Slab | Notes (Plain-Language) |
|---|---|---|
| Daily essentials (packaged foods, toiletries, kitchen basics) | 5% | Most routine purchases move to the 5% slab to ease monthly budgets. |
| Consumer durables (TVs, ACs, washing machines, refrigerators) | 18% | Big-ticket home items shift to the 18% slab under the simplified structure. |
| Small/entry-level cars | 18% | Core GST at 18%. (Any product-specific cess, if applicable, is as per notified norms.) |
| Health insurance (individual) | 0% | Tax removed on individual policies to lower overall premium outgo. |
| Life insurance (individual) | 0% | No GST on premiums; helps long-term protection and savings plans. |
| Sin & luxury goods (e.g., cigarettes, aerated drinks, luxury cars) | 40% | Higher slab to discourage harmful/luxury consumption. |
| Gold jewellery / bullion | Check latest notification | Gold GST rate and any changes are notified separately; verify at purchase time. |
| Cement & construction materials (cement, tiles, fittings) | 18% | Falls under the general slab unless a specific item is notified otherwise. |
| Health & general insurance add-ons (riders, top-ups) | 0% | Where classified as part of individual health/life cover, tax exemption applies. |
| Cigarettes & tobacco products | 40% | Part of the high slab for sin goods; expect higher retail prices. |
At a glance
- Two main slabs: 5% and 18%
- Special high slab: 40% (sin/luxury)
- Insurance relief: 0% on individual health and life insurance
What’s Cheaper, What’s Costlier After New GST Rates
Cheaper Now
- Health insurance premiums – now 0% GST
- Life insurance policies – tax removed
- Daily essentials under 5% slab
- General medicines & medical equipment
- Some packaged foods shifting to lower slab
Costlier Now
- Cigarettes & tobacco products – 40% GST
- Aerated drinks and luxury beverages
- Luxury cars and SUVs (with cess)
- Some branded consumer durables at 18%
- Construction materials like cement & tiles
In short, essentials and insurance get relief, while luxury and sin goods face a sharper tax burden. This shift aligns with the government’s next-gen GST reforms, aiming to ease household budgets while keeping luxury consumption taxed higher.
