Overview

• The overhaul collapses the 5%, 12%, 18% and 28% slabs into two main rates of 5% and 18%, with a 40% demerit rate for luxury and sin goods.
• Tobacco and related products will continue under the current GST plus compensation cess until loan obligations are cleared, while aerated and caffeinated drinks shift to 40%.
• Essentials are zero‑rated or cut sharply, including UHT milk, paneer, rotis and school supplies, with 33 life‑saving drugs exempt and individual life and health insurance premiums made tax‑free.
• Items moved from 28% to 18% include small cars and two‑wheelers up to 350cc, cement, air conditioners, large televisions, tractors and auto parts, with corrections to inverted duties in textiles and fertilisers.
• Markets and industry leaders welcomed the changes, benchmark indices opened higher with autos and insurance gaining, and banks expect festive‑season demand to strengthen under the new rates.