GST Overhaul From September 22: All Your Questions Answered

GST Overhaul From September 22: All Your Questions Answered

Everyday essentials, vehicles, insurance and even travel are set to see new GST rates. Here's everything you need to know before the changes take effect on September 22, explained in FAQs.

New Delhi: The GST Council has rolled out one of the biggest reforms since the introduction of the Goods and Services Tax. From September 22, 2025, India will move to a simplified two-slab system of 5% and 18%, along with a special 40% rate for luxury and sin goods. Everyday essentials such as milk, paneer, and roti have been exempted, insurance has been made tax-free, and costs for construction and farming equipment are being reduced.

But big changes always come with bigger questions. What exactly gets cheaper? What stays the same? How will billing work if you have already made an advance payment? And what about services such as travel, insurance or e-commerce? To cut through the noise, here are answers to the most frequently asked questions on the new GST rates, explained in simpler language.

1. When do the new GST rates apply?

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The revised GST rates will take effect across India on September 22, 2025. The only exceptions are tobacco products and gutkha, which will continue under the old regime until further notice.

2. What are the new slabs?

The tax structure has been reduced to two main slabs, which are 5% and 18%. A higher slab of 40% has been introduced for goods such as luxury cars, large SUVs, alcohol substitutes, betting, casinos and other high-end products.

3. What about food items?

Essential food items remain exempt from GST. This includes UHT milk, paneer, pizza bread, chapatti and roti. All of these will now carry no tax.

4. Are insurance policies included?

Yes, both life and health insurance are exempt from GST under the new system. This includes term insurance, ULIPs, family floater health policies and senior citizen health plans.

5. What happens if I supply goods before September 22 but bill after?

The tax rate will depend on the date of payment. If payment is made after September 22, the new rate applies. If it is made before that date, the old rate continues.

6. What about imports?

Imported goods will be taxed at the same GST rates as domestic goods, unless they fall under the exempt category.

7. Can I still use my old input tax credit?

Yes, the input tax credit already available in your ledger will remain valid and can be used to settle future tax liabilities.

8. What if my goods become exempt after September 22?

If your goods are moved to the exempt category after September 22, you will have to reverse any input tax credit claimed on such supplies.

9. Will e-way bills change?

No. The rules for e-way bills remain unchanged. Even if the GST rate changes while goods are in transit, the existing e-way bill will remain valid.

10. Are plant-based milk drinks covered?

Yes, plant-based milk products, including soya milk, will now attract a 5% GST rate.

11. Why a 40% slab for some drinks?

The 40% slab has been created to group similar beverages and avoid classification disputes.

12. What is the GST on medicines?

All medicines are now taxed at 5%, except those that are specifically exempt.

13. What about medical devices?

Medical devices are taxed at 5%, which is lower than earlier rates and is expected to reduce costs for patients and hospitals.

14. What about small cars?

Cars with petrol, LPG or CNG engines up to 1200cc and diesel cars up to 1500cc will now be taxed at 18% instead of 28%.

15. And bigger cars?

Large cars, SUVs and utility vehicles are placed in the 40% slab, as they are considered luxury items.

16. Motorcycles?

Motorcycles with engines up to 350cc will be taxed at 18%, while those above 350cc will attract 40% GST.

17. What about buses and trucks?

Buses and trucks will now be taxed at 18%, which is a reduction from the previous slab.

18. Agriculture equipment?

Agricultural machinery such as sprinklers, drip irrigation systems and harvesters are taxed at 5%, making them more affordable for farmers.

19. Why not exempt tractors?

Tractors have not been exempted because exemptions block input tax credit. Instead, they have been placed under a lower rate to reduce costs while preserving the credit chain.

20. Household items?

Common household items such as soaps, shampoos and talcum powders are taxed at 5%. Toothpaste, toothbrushes, and dental floss also fall under this category.

21. Electronics?

Consumer electronics such as air conditioners, dishwashers and televisions will now attract 18% GST. The 18% slab applies even to larger TVs.

22. Energy sector?

Renewable energy devices are placed under the 5% slab, while coal has been restructured so that there is no additional burden.

23. Hotels and travel?

Hotel rooms priced up to Rs 7,500 per night are taxed at 5%. Bus and train fares are also at 5%. Air travel attracts 5% in economy and 18% in business class.

24. Entertainment?

Casinos, betting and IPL tickets fall under the 40% slab. Other sporting events are taxed at 18% if the ticket price is above Rs 500.

25. What about cinema tickets?

Cinema tickets up to Rs 250 are taxed at 5%, while those above Rs 250 attract 18% GST.

26. How does GST change for education?

Education services such as school tuition remain exempt. Coaching classes and training programmes are taxed at 18%.

27. Will GST apply to hospital services?

Basic hospital services remain exempt, but certain value-added services inside hospitals may attract 18% GST.

28. What about telecom services?

Telecommunication services, including mobile and internet, are taxed at 18%.

29. How are financial services treated?

Financial services such as bank charges and processing fees continue to attract 18% GST.

30. What about insurance renewals?

Renewals of life and health insurance policies are exempt in line with the exemption for insurance products.

31. Is GST applicable on gold?

Yes. Gold jewellery and bullion are taxed at 3%, while jewellery making charges attract 5%.

32. What about real estate?

Under-construction flats are taxed at 5% without ITC. Affordable housing projects continue to enjoy concessional rates.

33. How does GST impact restaurants?

Standalone restaurants and those in hotels with tariffs below Rs 7,500 are taxed at 5%. Restaurants in higher-end hotels may be taxed at 18%.

34. Are services like cab rides affected?

Yes. App-based cab aggregators and regular taxi services are taxed at 5%.

35. What about railways?

Rail passenger fares are taxed at 5%, while freight services attract 12%.

36. How are airlines taxed?

Economy class tickets are taxed at 5%, while business class tickets are taxed at 18%.

37. What about tour packages?

Tour operator services attract 5% GST without ITC.

38. Is GST applicable on e-commerce?

Yes. Goods and services sold via e-commerce platforms are taxed at the same rates as offline products.

39. What about alcohol?

Alcohol for human consumption remains outside GST and continues to be taxed by states.

40. How is tobacco treated?

Tobacco products attract GST along with an additional cess, keeping them in the higher tax range.

41. What about petroleum products?

Petrol, diesel and natural gas are outside GST and continue under excise and Value Added Tax (VAT).

42. How is electricity treated?

Electricity supply remains exempt, as it is considered essential.

43. Are fertilizers covered?

Fertilizers are taxed at 5% to reduce costs for farmers.

44. What about seeds?

Seeds for sowing are exempt from GST.

45. How does GST apply to textiles?

Textiles fall under the 5% or 12% slab, depending on the product.

46. What about footwear?

Footwear priced up to Rs 1,000 is taxed at 5%. Above Rs 1,000, it is taxed at 18%.

47. Are cosmetics affected?

Yes. Cosmetics and beauty products attract 18% GST.

48. What about sanitary napkins?

Sanitary napkins are exempt from GST.

49. How are packaged foods taxed?

Packaged foods like biscuits, chocolates and snacks attract 18%. Unbranded staples remain exempt.

50. What about bottled water?

Packaged drinking water attracts 18% GST.

51. Are aerated drinks included?

Yes. Aerated drinks fall under the 40% slab.

52. How are sweets and confectionery taxed?

Most sweets and confectionery attract 18% GST, though unbranded mithai may remain exempt.

53. What about edible oils?

Edible oils are taxed at 5%.

54. How does GST affect fuel like LPG?

Domestic LPG is taxed at 5%, while commercial cylinders attract 18%.

55. What about kerosene?

PDS kerosene remains exempt.

56. Are books taxed?

Printed books are exempt from GST.

57. What about newspapers?

Newspapers and periodicals are exempt, but advertisements within them are taxed at 5% or 18%, depending on the medium.

58. How is stationery treated?

Stationery such as pens, pencils and notebooks is taxed at 12% or 18%.

59. What about printing services?

Printing of books and newspapers is exempt, while commercial printing attracts 18%.

60. Are digital services taxed?

Yes. Online subscriptions, streaming platforms and cloud services are taxed at 18%.

61. What about software?

Software products and services are taxed at 18%.

62. How are IT services treated?

IT consultancy and related services attract 18% GST.

63. Are exports covered?

Exports are zero-rated, meaning they are exempt from tax but still allow input credit.

64. What about SEZs?

Supplies to SEZs are also zero-rated.

65. How are imports handled?

Imports are taxed at the same rate as domestic supplies, in addition to customs duties.

66. Are charitable trusts exempt?

Charitable trusts remain exempt for their core activities, but commercial services are taxable.

67. What about religious services?

Religious services provided by places of worship are exempt.

68. How are government services taxed?

Most government services are exempt, but commercial activities by government bodies may attract GST.

69. What about lottery and betting?

Lotteries, betting and gambling are taxed at 40%.

70. Are second-hand goods taxed?

Second-hand goods are taxed only on the margin between purchase and resale price.

71. What about real estate resale?

Sale of ready-to-move-in flats or resale properties remains outside GST. Stamp duty and registration fees continue.

72. How are works contracts treated?

Works contracts, including those for government projects, are taxed at 18%.

73. What about transport of goods?

Goods transport by road is taxed at 5% without ITC or 12% with ITC.

74. How does GST apply to courier services?

Courier and logistics services are taxed at 18%.

75. What about financial markets?

Stockbroking, mutual funds and asset management services remain under the 18% slab.

Source: ZeeNews
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