The new GST 2.0 updates announced in the latest GST council meeting include exciting news for individuals and businesses alike and are a big win for the common Indian citizen.
Although the headline may grab attention, the real buzz about this budget lies in India’s new personal income tax structure.
This sweeping GST reform promises to transform how the common man saves, spends, and plans. Services will be implemented with effect from 22nd September 2025.
If you are someone hunting for the latest GST rates and notification details or simply curious about how your grocery bill will look next month, these GST updates are a must-read for every middle-class Indian.
Read on to learn more about the new and bold changes in GST slabs in India and their effects on commoners.
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Latest GST 2.0 Changes Explained
The GST council’s latest meeting, held in September 2025, has slashed rates and revamped the structure into just two slabs: 5% and 18% for most goods and services, with a new 40% slab for luxury and sin goods.
Although this was speculated earlier, this is the official announcement made by the Finance Minister, followed by a detailed FAQ session.
Finance Minister Nirmala Sitharaman summed up the intent: “These reforms have been carried out with a focus on the common man… rates have come down drastically”.
Many goods like essentials, healthcare, renewables and even small vehicles now attract a much lower GST than before, making daily expenses easier on the wallet. This has also made tax calculation significantly simpler, reducing the complexity.
Read More: Upcoming Next-Gen GST Reforms in India
New GST Rates on Daily Essentials
Just like the Finance Minister has declared in the conference, the new GST rates on daily essentials are now cheaper, with many must-have items falling to 5% or zero GST. This includes Hair oil, soaps, shampoos, bicycles, etc., which were once at 18% but are now just 5%.
Basic food items like milk, bread, paneer and curd are fully exempt.
Here is an overview of GST charges on daily essentials.
| Item | Old GST Rate | New GST Rate |
| Milk, Bread, Paneer, Curd | 0-5% | Nil |
| Hair Oil, Shampoo, Toiletries | 18% | 5% |
| Butter, Ghee, Cheese | 12% | 5% |
| Packaged Snacks | 12-18% | 5% |
| Bicycles | 12-18% | 5% |
| Utensils, Stationery | 12% | 5% |
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New GST Rates for Automobiles
With the GST 2.0 implementation, many small car/bike owners and buyers will get a huge relief.
Most small cars, motorcycles (with an engine capacity of less than 350 cc), and all auto parts are now subject to 18% GST under the latest GST reform on automobiles, which was previously part of the 28% bracket.
Here is a simple table to understand what all the changes are under the new GST updates.
| Category | Old GST Rate | New GST Rate |
| Small Cars (below 1200 cc) | 28% | 18% |
| Motorcycles (less than or equal to 350 cc) | 28% | 18% |
| Auto Parts | 18-28% | 18% |
| Buses, Trucks, Ambulances | 28% | 18% |
| Luxury Cars/Bikes (less than 350 cc) | 28% | 40% |
| Racing Cars, Yachts | 28% | 40% |
Luxury vehicles, superbikes, racing cars, yachts, and helicopters fall under the new 40% slab.
Suggested Read: Cars to be Cheaper with New GST Reforms
GST Reforms on Healthcare
With the upcoming implementation of the latest GST structure, the GST on the healthcare sector is expected to see major relief.
Life and health insurance premiums, 33 essential medicines, thermometers, glucometers, and diagnostic kits—all GST-free. Spectacles now jump down to 5% from 28%.
With a proper GST calculator, you could effectively assess the savings on third-party insurance for goods carriages, as the GST rate has been reduced from 12% to 5%.
Here is an overview of GST charges on healthcare and insurance.
| Healthcare Service/Product | Old GST Rate | New GST Rate |
| Life/Health Insurance | 18% | Nil |
| Essential Medicines | 12% | Nil |
| Corrective Spectacles | 28% | 5% |
| Medical Devices (Thermometers, etc.) | 12% | 5% |
New GST Rates on Fuels
The GST Council of India has updated taxes on fuels: coal, lignite, and some biodiesels now have higher rates, while fuel cell vehicles enjoy a GST reduction.
Transportation services for natural gas, crude oil, petrol, and diesel through pipelines also have new rates, reflecting a review of energy taxation.
Here is an overview of the GST 2.0 impacts on Fuels:
| Fuel Type | Previous Tax Structure | GST 2.0 Update |
| Petrol, Diesel, LPG, CNG | Excise + VAT | No GST applied |
| Coal, Lignite | 5% | 18% |
Suggested Read: Types of GST in India
Latest GST Changes on Renewable Energy
The 56th GST Council declared major changes and impacts of the GST reforms of 2025 on renewable energy, including a reduction of taxes on renewable energy devices to promote sustainability.
Items such as solar cookers, water heaters, biogas plants, windmills, and fuel cell vehicles are now taxed at 5% instead of 12%.
This reduction aims to increase the use of sustainable energy sources for a greener future.
Here is a brief overview of GST reforms on renewable energy:
| Renewable Item | Old GST Rate | New GST Rate |
| Solar Cookers/Water Heaters | 12% | 5% |
| Wind Turbines/Devices | 12% | 5% |
| Biogas/Waste-to-Energy Systems | 12% | 5% |
| Hydrogen Fuel Cell Vehicles | 12% | 5% |
| Non-lithium Batteries | 28% | 18% |
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Impact of GST 2.0 on Other Goods
Beyond automobiles, daily essentials, healthcare, fuel, and renewable energy, the 56th GST Council meeting has introduced further significant rate rationalisations across various other sectors.
Yes, apart from the categories you’ve mentioned (Automobiles, Daily Essentials, Health Care, Fuel, and Renewable Energy), the GST Council also made recommendations relating to changes in GST tax rates for services.
Here’s a quick snapshot of the key changes regarding the revised GST rates across other sectors:
| Category | Goods/Services (Examples) | Old GST | New GST |
| Tobacco & Related | Pan masala, gutkha, cigarettes, cigars, pipes | 28% | 40% |
| Bidi | 28% | 18% | |
| Bidi leaves, Indian katha | 18% | 5% | |
| Textiles & Fertilizers | Handmade fibre, yarn, synthetic fibres | 12–18% | 5% |
| Sulphuric/Nitric acid, Ammonia, pesticides, micronutrients | 18% | 5% | |
| Services | Air/motor/rail transport, GTA, fuel pipelines, multimodal | 12% | 18% |
| Hotel (≤₹7,500), beauty & wellness, effluent/waste treatment, cinema tickets | 12% | 5% | |
| Job work (pharma, printing, leather, etc.) | 12% | 5% | |
| Insurance of goods carriage | 12% | 5% | |
| Petroleum exploration/mining services | 12% | 18% | |
| Construction | Cement | 28% | 18% |
| Sand-lime bricks, stone inlay | 12% | 5% | |
| Govt. works contracts (incl. sub-contracts, oil/gas offshore) | 12% | 18% | |
| Handicrafts & Misc. Goods | Wood, cork, marble, granite, menthol (natural), rubber, spectacles, coir, lenses, stationery | 12% | 5% |
| Menthol (synthetic), incense substitutes, biodiesel, petroleum ops | 12% | 18% | |
| Paper & Pulp | Pulp, basic paper, bags, trays | 12% | 5% |
| Coated/processed papers, dissolving pulp, kraft paper | 12% | 18% | |
| Defence | Certain defence goods & services | 12% | 5% / Exempt |
| Machinery & Electricals | Engines, pumps, accumulators, ignition equipment | 28% | 18% |
| Nuclear fuel elements | 12% | 5% | |
| Gambling & Casinos | Casinos, race clubs, betting, online gaming | 28% | 40% |
| Footwear | ≤₹2,500 per pair | 12% | 5% |
Suggested Read: Price Drops on Amazon & Flipkart After GST Reforms
Prepare for GST 2.0 & Don’t Get Left Behind
The New GST 2.0 reforms of 2025 will bring a significant shift in India’s tax structure, simplifying compliance while directly benefiting the common man, small businesses, and middle-class households.
With reduced GST rates on daily essentials, healthcare, automobiles, and renewable energy, the reforms are designed to ease financial burdens and promote sustainable growth.
At the same time, higher GST slabs for luxury and sin goods ensure a balanced approach to revenue generation.
For every Indian citizen, these updates mean lower household expenses, improved affordability, and smarter financial planning. As the new GST rates come into effect from 22nd September 2025, staying informed and prepared will help you make the most of this transformational change in the Indian economy and taxation landscape.
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