The Next-Gen GST reforms approved in September 2025 mark a turning point for India’s tax framework. With a simplified two-rate structure of 5% and 18%, and targeted relief across critical sectors, GST is being reshaped to directly benefit common citizens, entrepreneurs, and farmers, while driving growth across industries.
Here’s a detailed look at how different sectors will gain from these reforms starting 22nd September 2025.
1. Food and Household Essentials
Taxes on everyday essentials have been reduced, bringing immediate relief to families and households.
- Staple items like UHT milk, paneer, chena, and traditional Indian breads will now attract 0% GST.
- Daily-use goods such as toothpaste, soaps, shampoos, toothbrushes, bicycles, and tableware are taxed at a reduced 5% rate.
- Popular packaged foods including chocolates, sauces, noodles, pasta, coffee, snacks, and preserved meats are also lowered from 12–18% to 5%.
- Consumer durables such as televisions (above 32 inches), ACs, and dishwashers will now fall under the 18% bracket instead of 28%, making them more affordable.
Impact: Significant savings on monthly household budgets and better affordability for consumer goods.
2. Housing and Construction
The real estate sector has received a big push with cuts in construction material rates.
- Cement has dropped from 28% to 18%.
- Granite blocks, marble, sand-lime bricks, and bamboo-based materials now stand at 5% instead of 12%.
- Wooden pallets, packing cases, and other joinery materials have also been reduced to 5%.
Impact: Affordable housing and infrastructure development, leading to higher home ownership and job creation in construction.
3. Automobile Industry
India’s fast-growing auto sector is set for revival due to reduced GST rates.
- Small cars and two-wheelers up to 350cc now have 18% GST instead of 28%.
- Auto parts, buses, trucks, and three-wheelers have also been brought down to 18%.
Impact: Lower vehicle costs, reduced disputes over classification, support for domestic manufacturing, and a boost to exports.
4. Agriculture and Farming
The backbone of India’s economy—agriculture—has seen major relief.
- Tractors reduced from 12% to 5%, with tires and parts from 18% to 5%.
- Harvesters, threshers, sprinklers, drip irrigation equipment, and poultry or bee-keeping machines all cut to 5%.
- Bio-pesticides and natural menthol dropped from 12% to 5%.
- Fertilizer inputs corrected under the inverted duty structure, encouraging domestic production.
Impact: Reduced costs for farmers, promotion of sustainable farming, and enhanced self-reliance in agriculture.
5. Services and Hospitality
The services sector, often burdened with higher GST, now enjoys tax relief too.
- Hotel stays costing up to ₹7,500 per night are reduced from 12% to 5%.
- Personal wellness and fitness services such as gyms, salons, barbers, and yoga classes drop from 18% to 5%.
Impact: Affordable wellness activities, revival of the hospitality sector, and better accessibility for citizens.
6. Textiles, Toys, and Handicrafts
Reforms in this sector focus on employment, exports, and traditional livelihoods.
- Man-made fibre and yarn now stand at 5% instead of 12–18%, correcting long-standing issues of inverted duty.
- Dolls, toys, handicraft idols, statues, paintings, and sculptures are all reduced from 12% to 5%.
Impact: Higher competitiveness of Indian textile exports and better support for artisans and cottage industries.
7. Education
Learning materials have been made cheaper to ease family expenses.
- Exercise books, pencils, erasers, crayons, and sharpeners shifted to 0% GST.
- Geometry boxes, school stationery, and trays reduced from 12% to 5%.
Impact: Lower cost of education, direct relief for parents, and wider access to academic resources.
8. Healthcare and Medical Sector
Healthcare affordability is at the heart of reforms.
- Zero GST on 33 life-saving medicines and diagnostic kits.
- Other medicines, including Ayurveda, Unani, and Homoeopathy products, cut to 5% from 12%.
- Spectacles and corrective lenses drop from 28% to 5%.
- Thermometers, oxygen supplies, surgical instruments, and other medical devices reduced to 5%.
Impact: Affordable healthcare for citizens, stronger domestic pharma manufacturing, and wider access to medical essentials.
9. Insurance and Financial Protection
For the first time, insurance premiums have been exempted from GST:
- Life insurance, health insurance, floater plans, and senior citizen policies now enjoy full GST exemption.
Impact: Wider financial security, increased insurance coverage, and support for the government’s “Insurance for All by 2047” vision.
The sector-specific GST 2025 reforms simplify tax rates, cut costs, and encourage compliance while creating a strong foundation for long-term growth. From households and farmers to MSMEs and exporters, every group benefits directly. With this two-rate system, fewer disputes and faster processes will make GST truly citizen-centric and business-friendly.
These changes, effective from 22nd September 2025, mark not just a reform in taxation but a step towards a more inclusive and growth-driven Indian economy.
