Starting September 22, 2025, the Indian government will implement new Goods and Services Tax (GST) rates aimed at controlling inflation and providing relief to common consumers. The Finance Ministry has issued an official notification announcing a fresh tax structure that classifies goods into seven categories, replacing the earlier notification number 01/2017. Under this new system, different products will be taxed at varying rates to balance affordability and revenue generation.
Lower Tax on Daily Essentials
According to the notification, milk, curd, and select dairy products will now attract only 2.5% GST, making them more affordable for households. Essential agricultural items such as fertilizers and certain farm-related chemicals have also been placed under lower tax brackets to support farmers. Many lifesaving medicines, including insulin and hepatitis test kits, will benefit from special concessional rates.
Industrial and Luxury Goods Face Higher Rates
While daily necessities will get relief, industrial chemicals and other industrial-use goods will be taxed at 9%. Luxury goods, including premium consumer products, will now carry a hefty 20% GST. Some special categories will attract rates of 1.5%, 0.75%, and 0.125%, depending on their use and classification. Additionally, a few select products listed under Schedule VII will see a tax of 14%.
Petroleum Products Under New Structure
The updated tax list also covers key petroleum products like coal, petroleum coke, and bitumen, which will face revised rates. While this step aims to increase revenue, experts warn that higher taxes on petroleum may continue to impact inflation, as fuel costs influence transportation and manufacturing expenses.
Traditional and Sports Goods Included
Traditional and recreational items such as chess boards, carrom boards, hawan samagri (ritual items), and other religious-use products are also included in the updated GST list. While some of these items will remain under low tax slabs to promote culture and sports, others may see slight revisions based on their category.
Expert Reactions
Economic experts believe these changes will lower the cost of daily essentials, easing the burden on common households. However, the increase in tax on petroleum and certain industrial raw materials may keep overall inflationary pressure intact. “This is a balanced move,” said a senior tax consultant, “as it provides relief to the poor while ensuring higher revenue from luxury consumption.”
Government’s Rationale
The Finance Ministry has described the reform as a step towards social and economic balance. By reducing tax on basic needs and increasing it on luxury and industrial goods, the government aims to curb inflation without compromising on revenue collection. The new GST rates are effective nationwide from September 22, 2025, and are expected to stabilize prices of essential commodities over the coming months.
