From medicines and milk to cars, soaps, and even IPL tickets, the GST Council's latest rate rationalization will change how consumers and businesses pay taxes beginning September 22. While some essentials will be reduced by 5%, luxury and sin goods will face higher levies of up to 40%.

To clear up any confusion, the government has issued a detailed set of frequently asked questions (FAQs) outlining how the new rates apply to goods, services, and sectors.

Key Highlights

• GST simplified to 5% and 18% slabs, with a 40% rate for luxury “sin” goods.
• Tax cuts on essentials (soap, shampoo, milk) and zero GST on life and health insurance.

When will the new rates begin?

Most goods and services will be subject to revised rates beginning September 22, 2025. The current rates and cess for cigarettes, chewing tobacco, zarda, unmanufactured tobacco, and beedis will remain in effect until any outstanding compensation cess loans are repaid.

Also Read: GST Council Finalizes 2-Slab Structure, Eases Refunds and Compliance for Businesses

Key FAQs on New GST Rates Effective September 22

Has the registration threshold changed?

No. Registration limits under the CGST Act, 2017 remain unchanged.

Where will the revised rates be published?

On the CBIC website via official notifications.

What if goods/services were supplied before September 22 but invoiced later?

Rates apply as per time of supply rules:

• If payment comes after the change → applicable rate on invoice/payment date (whichever is earlier).
• If payment was made before the change → applicable rate on payment date.

What about advances received before the change?

GST will be levied per time of supply provisions.

Can Input Tax Credit (ITC) still be claimed on old purchases?

Yes, if tax was correctly charged, subject to CGST Act conditions.

Imports

IGST on imports will follow the new rates unless exempted.

Can old ITC from higher rates still be used?

Yes. ITC in your ledger remains valid.

If my supply becomes exempt after September 22?

ITC can be used for supplies made before, but must be reversed afterward.

Refunds under inverted duty?

Not available if inputs and outputs are identical goods taxed at different times.

Stock held on September 22?

Taxed at the new rate when supplied, not when purchased.

Do e-way bills need re-generation?

No. Existing ones remain valid until expiry.

Sector-Wise GST Changes

• Food & Beverages: UHT milk exempt; plant/soya drinks at 5%; carbonated fruit drinks at 40%; Indian breads exempt; packaged paneer taxed separately.
• Agriculture: Farm machinery like sprinklers, harvesters, and mowers reduced to 5% (earlier 12%).
• Healthcare: Medicines mostly at 5%; medical devices at 5% with expedited refunds.
• Automobiles: Small cars 18% (earlier 28%); mid/large cars 40%; three-wheelers, buses, ambulances, goods vehicles at 18%; bicycles 5% (earlier 12%).
• Industry & Energy: Renewable energy gear at 5%; marble/granite blocks at 5% (earlier 12%); batteries unified at 18%; ACs, TVs, dishwashers at 18% (earlier up to 28%).
• Consumer Goods: Soaps, shampoos, face powders, toothpaste, toothbrushes, floss at 5%.
• Insurance & Services: All life and health insurance exempt; passenger transport 5% or 18% with ITC; casinos, betting, online gaming at 40%.
• Job Work & Contracts: Pharma/leather job work at 5% (earlier 12%); others at 18%; offshore oil & gas contracts at 18%.
• Hospitality & Wellness: Hotels below ₹7,500/day at 5%; beauty/wellness/yoga/salons/gyms at 5% (earlier 18%); IPL tickets 40%.