GST Slab: A big change is going to happen in the tax system in India. This decision, which will affect the expenses of the common man and the prices of luxury goods, will come into effect from 22 September 2025. The government has simplified the Goods and Services Tax (GST) structure and has announced to keep only three slabs now 5%, 18% and the new 40%. This means that the old slabs of 12% and 28% have now been abolished.
On which things will 40% GST be imposed
The government has kept this new slab mainly for those items which are considered luxury or “sin goods”. This includes cigarettes, pan masala, gutka, chewing tobacco, cigars and other tobacco related products. Apart from this, carbonated and sugary drinks, caffeinated cold drinks will also become expensive now.
People will be most focused on expensive cars and motorcycles. Now 40% GST will be levied on petrol cars with engines of more than 1200 cc, diesel cars with engines of more than 1500 cc and motorcycles with engine capacity of more than 350 cc. Not only this, super-luxury items like yachts and personal aircraft have also been brought under this purview.
Relief for the common man
While luxury items will become expensive on one hand, the government has also made arrangements to provide relief to the common people. Now all personal life insurance and health insurance policies have been completely exempted from GST. Finance Minister Nirmala Sitharaman called it a “historic Diwali gift”.
This decision means that the tax burden on crores of people paying insurance premiums will now be reduced. Also, due to reduction in tax on daily essential items, there will be some relief in household expenses.
Why is this ‘Next-gen GST reform’ special
This change, announced after the 56th meeting of the GST Council, makes the tax structure simpler. Now most goods and services will be covered through only two main slabs 5% and 18%. The 40% slab will be only for those things which are either considered luxury or have a negative impact on health and society.
However, this new slab will not be applicable immediately on tobacco and some related products. The government has clarified that the existing tax and compensation cess for these will continue for the time being. The new rates will be applicable only when the technical issues related to old loans and cess are completely resolved.
What will be the impact on your life
If you pay insurance premium daily, drink cold drinks, ride a bike or are fond of luxury cars, then this change is directly related to you. While insurance policy holders will get relief, those who use expensive vehicles and tobacco products will now have to loosen their pockets.
The biggest message of this change is that the government wants to provide relief to the general public in essential services, while trying to create economic balance by increasing the tax burden on non-essential and luxury goods.
Disclaimer: This article is written for general information purposes only. Tax related policies may be changed by the government from time to time. Before making any financial or purchase decision, be sure to take official notification or expert advice.
Also Read:
PM Modi in China for SCO Summit: Appeal for strong action against terrorism
