Prime Minister Narendra Modi recently emphasised the critical importance of timely economic reforms, stating, "Without timely changes, we cannot give our country its rightful place in today's global situation. I had said this; time is crucial to undertake next-generation reforms to make India self-reliant."
He further highlighted the government's commitment to delivering a "double blast of happiness before this Diwali and Chhath Puja" through transformative initiatives like GST 2.0.
Echoing this visionary outlook, Suvit has been steadfast in advancing timely changes in accounting practices.
We have prepared Indian CAs with the AI accounting tool and knowledge to seamlessly transition into next-generation reforms, such as GST 2.0, ensuring smooth compliance and empowering businesses to capitalise on growth opportunities.
Rooted in this shared vision of progress and readiness, this blog presents a comprehensive overview of the GST 2.0 update for 2025, detailing the new tax slabs and complete product list crafted to streamline India's indirect tax system and drive inclusive economic prosperity.
Overview of GST 2.0 Reform
GST 2.0 is designed to streamline India's indirect tax regime by rationalising tax slabs and clarifying product categorisations. The existing multiple slab system, comprising 5%, 12%, 18%, and 28% will be replaced by three key slabs: 5%, 18%, and a new 40% slab for sin and luxury goods.
This simplification addresses the challenges of classification disputes and compliance complexities, making the tax system more transparent and predictable.
New GST Tax Slabs and Categories
| Category | Item(s) | Old GST Rate(s) | New GST Rate (2025) |
|---|---|---|---|
| Food Items | Vegetable fats/oils | 12% | 5% |
| Wax, vegetable wax | 18% | 5% | |
| Meat, fish, and related food products | 12% | 5% | |
| Dairy (butter, ghee, paneer, thickeners) | 12% | 5% | |
| Soy milk | 12% | 5% | |
| Sugar, boiled sweets | 12%-18% | 5% | |
| Chocolate and cocoa powder | 18% | 5% | |
| Pasta, corn flakes, noodles, biscuits, malt extract (non-cocoa) | 12%-18% | 5% | |
| Jam, jelly, marmalade, nuts/fruit paste, dried fruits, nuts | 12% | 5% | |
| Fruit juice, coconut water | 12% | 5% | |
| Pre-packaged pizza bread, khakhra, chapati, roti | 5% | Nil | |
| Consumer & Domestic Goods | Hair oil, shampoo, toothpaste, shaving products, talcum powder | 18% | 5% |
| Toilet soap (bar/cake) | 18% | 5% | |
| Toothbrush, dental floss | 18% | 5% | |
| Shaving cream/lotion, aftershave | 18% | 5% | |
| General tableware/kitchenware (wood, iron, copper, aluminium, plastic) | 12% | 5% | |
| Feeding bottles, nipples, plastic beads | 12% | 5% | |
| Eraser | 5% | 0% | |
| Candles | 12% | 5% | |
| Umbrellas & accessories | 12% | 5% | |
| Sewing needles | 12% | 5% | |
| Sewing machines & parts | 12% | 5% | |
| Handbags (cotton/jute) | 12% | 5% | |
| Napkins/diapers for babies | 12% | 5% | |
| Furniture made of bamboo, cane, rattan | 12% | 5% | |
| Milk cartons (iron, steel, aluminium) | 12% | 5% | |
| Pencil, sharpener, chalk | 12% | 0% | |
| Maps, globes, charts | 12% | 0% | |
| Practice books, notebooks | 12%-5% | Nil | |
| Electronics | Air conditioners | 28% | 18% |
| Dishwashing machines | 28% | 18% | |
| TVs (LED, LCDs), monitors, projectors | 28% | 18% | |
| Agriculture & Fertilizer | Tractors (excluding road tractors >1800cc) | 12% | 5% |
| Rear tractor tires/tubes | 18% | 5% | |
| Agricultural machinery (soil prep, harvesting, threshing) | 12% | 5% | |
| Composting machines | 12% | 5% | |
| Sprinklers, drip irrigation, lawn/sports rollers | 12% | 5% | |
| Bio-pesticides, micronutrients | 12% | 5% | |
| Fuel pumps | 28% | 18% | |
| Hydraulic pumps for tractors | 18% | 5% | |
| Health | Health & term insurance | 18% | Nil |
| Thermometers, diagnostic kits | 12%-18% | 5% | |
| Blood glucose monitors (glucometers) | 12% | 5% | |
| Medical-grade oxygen, hydrogen peroxide | 12% | 5% | |
| Spectacles | 12% | 5% | |
| Medical/surgical rubber gloves | 12% | 5% | |
| Many drugs and specialty drugs | 12% | 5% or 0% | |
| Selected rare drugs | 5%-12% | Nil | |
| Vehicles & Bikes | Tires | 28% | 18% |
| Motor vehicles (small cars, three-wheelers, ambulances, motorcycles <350cc, commercial vehicles) | 28% | 18% | |
| Motorcycles >350cc | 28% | 40% | |
| Large SUVs, luxury/premium cars, hybrid above range, racing cars | 28% | 40% | |
| Rowing boats/canoes | 28% | 18% | |
| Bicycles and non-motorized three-wheelers | 12% | 5% | |
| Tobacco & Beverages | Cigars, cigarettes, tobacco products | 28% | 40% |
| Beedi (traditional hand-made tobacco) | 28% | 18% | |
| Carbonated/aerated, flavored, caffeinated drinks | 28% | 40% | |
| Plant-based milk, fruit-pulp beverages | 12%-18% | 5% | |
| Clothing | Synthetic yarn, unwoven fabric, sewing thread, staple fiber | 12%, 18% | 5% |
| Ready-made garments ≤ ₹2,500 | 12% | 5% | |
| Ready-made garments > ₹2,500 | 12% | 18% | |
| Paper | Paper for exercise/graph/lab notebooks | 12% | Nil |
| Graphic paper | 12% | 18% | |
| Paper sacks or bags, biodegradable bags | 18% | 5% | |
| Handicrafts & Art | Carved products (wood, stone, base metals, cork) | 12% | 5% |
| Handmade paper and paperboard | 12% | 5% | |
| Handicraft lamps | 12% | 5% | |
| Paintings, sculptures, pastels, antique collectibles | 12% | 5% | |
| Leather | Finished leather | 12% | 5% |
| Leather goods, gloves | 12% | 5% | |
| Building Materials | Tiles, bricks, stone inlay work | 12% | 5% |
| Portland, slag, hydraulic cement | 28% | 18% | |
| Energy & Renewable | Solar cookers, water heaters, biogas, wind, waste-to-energy, solar panels | 12% | 5% |
| Fuel cell automotive | 12% | 5% | |
| Coal, lignite, peat | 5% | 18% | |
| Services | Job work, umbrella, printing, bricks, pharmaceuticals, skins/leather (with ITC) | 12% | 5% |
| Hotel accommodation < ₹7,500 per day | 12% | 5% | |
| Cinema tickets < ₹100 | 12% | 5% | |
| Beauty services (no input tax credit) | 18% | 5% | |
| Casino/race club admission, betting, gambling | 28% | 40% | |
| Cricket match tickets (domestic & international) | 12% | 18% |
GST 2.0: Catalyst for Simplified Taxes and Inclusive Growth
GST 2.0, or the 56th GST council outcomes, represents a significant leap towards India's simplified, consumer-friendly, and business-efficient indirect tax system.
The reform is set to ease compliance, reduce disputes, and stimulate economic activity by rationalising tax slabs and refining product classifications.
Adopting these changes proactively will enable businesses and consumers to benefit fully from the new system while contributing to a more transparent and robust tax framework.
