Overview

• The four-rate structure is being replaced with 5% and 18% slabs and a distinct 40% band for sin and luxury goods, effective September 22, 2025.
• Relief measures include zero GST on many education and stationery items, exemptions for individual life and health insurance, and 5% or nil rates for several medicines and medical devices.
• Consumer durables and autos see broad cuts, with small cars and motorcycles up to 350cc moving to 18% and large vehicles and carbonated beverages placed in the 40% category.
• Tobacco-related products stay at 28% plus compensation cess until state compensation loans are repaid, after which they shift to the 40% slab.
• Transition rules clarify time-of-supply treatment, ITC reversal where supplies become exempt, and continued validity of e-way bills; the revenue impact is pegged near Rs 48,000 crore as industry leaders applaud the move and the opposition presses for multi-year state compensation.