Next-Gen GST Reforms – Old vs New Rates

On 3rd September 2025, the 56th GST Council Meeting marked a historic reform in India’s taxation system, presenting what is being called a “Next-Gen GST”. Branded as a Diwali gift for the nation, these reforms are designed to ease the burden on households, boost agriculture, empower MSMEs, uplift healthcare, and make automobiles affordable. The changes aim to simplify compliance, cut down costs for citizens, and support India’s vision of Aatmanirbhar Bharat.

Here You Need To Know Old vs New Tax Rates

Relief for Households & Daily Essentials

Everyday goods have become cheaper, directly benefiting families.

• Hair Oil, Shampoo, Toothpaste, Toilet Soap: 18% → 5%
• Tooth Brushes, Shaving Cream: 18% → 5%

Uplifting Farmers & Agriculture

Farmers and agriculture-based industries received major relief, making inputs and machinery affordable.

• Tractor Tyres & Parts: 18% → 5%
• Tractors: 12% → 5%
• Butter, Ghee, Cheese & Dairy Spreads: 12% → 5%
• Bio-Pesticides, Namkeens, Bhujia & Mixtures: 12% → 5%
• Micro-Nutrients: 12% → 5%
• Utensils: 12% → 5%
• Drip Irrigation Systems & Sprinklers: 12% → 5%
• Baby Feeding Bottles, Napkins & Clinical Diapers: 12% → 5%

Relief in Healthcare Sector

Healthcare received a strong push to make medical services and equipment affordable.

• Health & Life Insurance: 18% → Nil
• Thermometer: 18% → 5%
• Medical Grade Oxygen: 12% → 5%
• Diagnostic Kits & Reagents: 12% → 5%
• Glucometer & Test Strips: 12% → 5%
• Corrective Spectacles: 12% → 5%

Automobiles Made Affordable

The automobile sector saw a major tax reduction to encourage eco-friendly and small vehicles.

• Petrol, Petrol Hybrid, LPG, CNG Cars (≤ 1200cc & 4000mm): 28% → 18%
• Diesel & Diesel Hybrid Cars (≤ 1500cc & 4000mm): 28% → 18%
• Three-Wheeled Vehicles: 28% → 18%
• Motorcycles (≤ 350cc): 28% → 18%
• Motor Vehicles for Transport of Goods: 28% → 18%

Affordable Education

Education materials have been made cheaper to reduce costs for students.

• Maps, Charts & Globes: 12% → Nil
• Pencils, Sharpeners, Crayons & Pastels: 12% → Nil
• Exercise Books, Notebooks, Erasers: 12% → 5%

Saving on Electronic Appliances

Households benefit from reduced prices on appliances and electronics.

• Air Conditioners: 28% → 18%
• Television (above 32”): 28% → 18%
• Monitors & Projectors: 28% → 18%
• Dish Washing Machines: 28% → 18%

Process Reforms in GST

The reforms go beyond rate cuts and focus on ease of doing business.

Registration: Automatic registration within 3 working days, system-based analysis.

Refunds: Provisional refunds sanctioned automatically for,

• Zero-rated supplies
• Inverted duty structure cases