GST moves to two main rates of 5% and 18%, plus 40% for a few items

From 22 September 2025, GST has two main rates, 5% and 18%, and a 40% rate for a select few goods and services, as approved by the 56th GST Council on 3 September 2025.

Effective or announced 22 September 2025Impact for foreign investors: high

What changed

The 56th GST Council approved a simpler rate structure on 3 September 2025, effective 22 September 2025: 5% and 18% as the main rates, with 40% for a select few items. Many everyday goods and packaged foods moved to 5%; ACs and larger TVs fell from 28% to 18%; most medicines and many devices fell to 5%; renewable energy devices fell from 12% to 5%; small cars and auto parts pay 18% and EVs 5%. Tobacco initially stayed on earlier rates.

Who it affects

Manufacturers, importers and retailers pricing goods for the Indian market, and investors modelling consumer demand.

What to do

Re-map product HS codes to the new rates, check input tax credit positions on inventory, and update pricing and invoicing systems.

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