The GST Council on Wednesday approved a major overhaul of the indirect tax regime, replacing the existing four-tier structure of 5, 12, 18, and 28 per cent with a simplified two-rate system of 5 and 18 per cent, while introducing a special 40 per cent slab for select items. The new rates will come into force from September 22. 

What gets cheaper

Individual life and health insurance policies will now attract zero GST, down from 18 per cent.

Ultra high temperature, paneer, paratha, roti, pizza bread, khakra and chena are exempt from GST. Butter, ghee, condensed milk, cheese, dry fruits, jams, jellies, confectionery, ice cream, pastry and biscuits, corn flakes, and cereals will now attract 5 per cent GST instead of 12–18 per cent.

Fertiliser inputs like sulphuric acid, nitric acid, and ammonia, along with biopesticides and micronutrients, are down to 5 per cent from 12–18 per cent. Agricultural equipment, tractors, threshing, and soil-preparation machinery will also be taxed at 5 per cent.

Small cars (petrol <1200cc, diesel <1500cc) and motorcycles up to 350cc will attract 18 per cent GST instead of 28 per cent. Small hybrid cars also benefit. EVs remain at 5 per cent.

Everyday items like shampoo, toothpaste, toothbrushes, talcum powder, face powder, soaps, hair oil, tooth powder, feeding bottles, utensils, bicycles, umbrellas, and bamboo furniture have been brought down to 5 per cent.

GST on cement has been cut to 18 per cent from 28 per cent, while auto components too are down to 18 per cent.

What gets costlier

Soft drinks, colas, fruit-based aerated drinks, and all carbonated beverages will now attract 40 per cent GST, up from 28 per cent.

Energy drinks and other caffeinated beverages, too, will face 40 per cent GST.

Cars with petrol engines above 1200cc or diesel engines above 1500cc and longer than 4,000 mm, along with motorcycles above 350cc, racing cars, yachts, and personal-use aircraft will attract 40 per cent GST.

Aerated waters and flavoured beverages containing added sugar or sweeteners will now be taxed at 40 per cent.

Pan masala, gutkha, cigarettes, chewing tobacco, and bidi will continue under 28 per cent GST plus compensation cess until dues are repaid, after which they will shift to the 40 per cent slab.