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For most goods and services covered by India’s 2025 GST rate changes, the new rates took effect on 22 September 2025. The headline structure is 5% and 18%, plus a 40% special rate for selected goods and services—but an item’s exact classification, exemptions, and any applicable compensation cess determine the rate that actually applies. Specified tobacco products were treated separately, so check for a later notification before relying on their current rate.
What changed in India’s GST rates?
At its 56th meeting, the GST Council described a reformed structure with two principal rates: a 5% merit rate and an 18% standard rate, alongside a 40% special rate for selected goods and services. It also announced exemptions and individual rate changes. This is a headline description, not a complete list of all possible GST treatments: some items are exempt, and specific categories may have distinct rules. The Council’s 3 September 2025 announcement described the structure as a “2 rate structure with a Standard Rate of 18% and a Merit Rate of 5%; a special de-merit rate of 40% for a select few goods and services.”
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Among the examples named in the announcement, hair oil, toilet soap bars, shampoos, toothbrushes, toothpaste, bicycles, tableware, kitchenware, and other household articles were among goods reduced from 12% or 18% to 5%. Certain foods, including UHT milk and specified paneer or chena and Indian breads, moved from 5% to nil. These examples do not establish the rate for every product with a similar everyday name; the tariff description and notified schedule control.
When did the changes take effect?
For goods and services other than the specified tobacco products, the changes took effect on 22 September 2025, according to the Ministry of Finance FAQ. That date matters when checking a bill or a rate quoted for a transaction around the change.
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The specified tobacco exception
The Ministry FAQ said the existing GST and compensation cess continued for cigarettes, chewing tobacco products such as zarda, unmanufactured tobacco, and beedi, with new rates to be implemented on a later date to be notified. It linked that timing to discharge of compensation-cess loan and interest liabilities. Because that statement is date-sensitive, check for a subsequent notification before relying on it for a current purchase.
How do I find the rate for a particular item?
Do not infer a tax rate from a broad product label or from the 5%, 18%, and 40% headline alone. The exact goods description, tariff classification, effective date, exemption status, and any applicable compensation cess matter. For the detailed schedules, the government FAQ identifies Notification No. 9/2025-Central Tax (Rate) for amended goods rates, Notification No. 10/2025-Central Tax (Rate) for exempt goods, and Notification No. 2/2025-Compensation Cess (Rate) for amended compensation cess rates.
The Ministry FAQ gives these examples; thresholds and descriptions should be read narrowly:
| Item described in the Ministry FAQ | Rate stated | Important distinction |
|---|---|---|
| Motorcycles up to and including 350 cc | 18% | Motorcycles above 350 cc are listed at 40%. |
| Motorcycles above 350 cc | 40% | The FAQ distinguishes engine capacity. |
| Bicycles and bicycle parts | 5% | The FAQ describes a reduction from 12%. |
| Spectacles or goggles for correcting vision | 5% | Other spectacles or goggles are listed at 18%. |
| Lithium-ion and other batteries under heading 8507 | 18% | The FAQ says batteries under this heading are uniformly 18%. |
These examples are from the Ministry’s follow-up FAQ. A similar-sounding product, a particular model, or a service may fall under a different tariff description; check the relevant schedule rather than assuming the example applies.
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Which rate applies if the supply, invoice, and payment dates differ?
A transaction that spans the rate-change date is not decided solely by the day a consumer receives an invoice. The Ministry FAQ points to section 14 of the CGST Act and explains that the time-of-supply result depends on the supply, invoice, and payment dates.
- For a supply made before the change with an invoice issued later, if payment is received after the change, the FAQ says the time of supply is the earlier of the payment-receipt date or invoice date.
- If payment was received before the change, the FAQ says the time of supply is the payment-receipt date.
- For an advance where supply is incomplete or no invoice has been issued, the rate is determined under the time-of-supply provisions.
These are not blanket rules for every billing dispute. The transaction’s facts and applicable statutory provisions matter. For a disputed charge, compare the dates and documents with the applicable notification and seek qualified tax advice if needed.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Do old MRP labels still apply?
The government’s follow-up FAQ says recalling, relabelling, or restickering packs already released into the market before 22 September 2025 was not mandatory if the manufacturer or marketing company ensured price compliance at the retailer level. This is a conditional rule about old stock and label changes; it is not permission to disregard the applicable consumer price or charge an arbitrary amount. The FAQ on stock and packaging addresses the transition.
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Outbyte PC Repair FREEClear out junk files and repair common Windows errorsFree Scan →Outbyte Driver Updater FREEScan for outdated or missing drivers - takes under a minuteDriver Scan →If a shop’s price or bill appears inconsistent, keep the bill and packaging. The relevant questions include the precise item, the applicable rate and effective date, whether the stock was released before the change, and whether the retailer-level price requirements were met.
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Will the GST change automatically lower the price I pay?
Not necessarily by a fixed amount. A GST rate is a tax rule, not a measured promise about the final retail price. The official material cited here does not provide a consumer-saving estimate or establish that every affected product’s shelf price fell by a particular amount. A rate reduction or exemption may affect the tax component, but the amount a consumer pays also depends on the product’s price and the applicable pricing rules.
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