Explore the latest GST rates in India for 2025, including updated slabs, recent revisions, and a comprehensive guide to goods and services tax.
The Goods and Services Tax (GST), launched in 2017, revolutionized India’s indirect tax system by unifying multiple taxes under one regime. Over the years, the GST Council has made several revisions to make the tax structure more efficient and business-friendly. As we enter 2025, understanding the latest GST rates and slabs for different goods and services is essential for taxpayers, business owners, and consumers alike.
This guide will help you understand the GST framework in 2025, along with updated rates, exemptions, and changes announced by the GST Council.
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What is GST?
Goods and Services Tax (GST) is a unified indirect tax levied on the supply of goods and services in India. It replaced various taxes such as VAT, Service Tax, Central Excise, etc. GST is a destination-based tax, meaning it is collected in the state where the goods/services are consumed.
It has four main components:
- CGST: Central GST
- SGST: State GST
- IGST: Integrated GST (for inter-state transactions)
- UTGST: Union Territory GST (for UTs)
Key Benefits of GST:
- Uniform Tax Structure: Eliminates the complexity of multiple indirect taxes.
- Ease of Doing Business: Simplifies tax compliance for businesses.
- Increased Transparency: Reduces tax evasion through a robust IT infrastructure.
- Boost to Economy: Encourages formalization and growth of the economy.
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GST Rate Slabs in 2025
There are five key GST slabs in India as of 2025:
| GST Rate | Category | Examples |
|---|---|---|
| 0% | Exempt items | Fresh fruits, vegetables, milk, education |
| 5% | Essential goods/services | Footwear, medicines, train tickets |
| 12% | Standard goods/services | Packaged food, garments, mobile phones |
| 18% | Most commonly taxed category | Restaurants (AC), electronics, insurance |
| 28% | Luxury & sin goods | Cars, tobacco, air conditioners |
Key Revisions in GST Rates (2024–2025)
The GST Council's 52nd and 53rd meetings held in late 2024 and early 2025 introduced several changes to tax rates and compliance measures. Here are the major updates:
1. Electric Vehicles (EVs)
- Old Rate: 5%
- New Rate (2025): 3% (as part of a push towards green energy)
- Applicable On: EVs, batteries for EVs, EV chargers
2. Health Insurance Premiums
- Old Rate: 18%
- New Rate (2025): 12% for individuals under ₹5 lakh annual income
- Rationale: To make health cover more affordable
3. Education Services – Online Learning Platforms
- Old Rate: 18%
- New Rate (2025): 12%
- Applies To: EdTech companies, online certification platforms
4. Ready-Made Garments Above ₹1,000
- Old Rate: 12%
- New Rate: Increased to 18%
- Reason: Streamlining rate anomaly with branded clothing
5. Hotel Accommodation
- Hotels charging less than ₹1,000/night remain GST exempt
- ₹1,001 to ₹7,500: 12%
- Above ₹7,500: 18%
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GST on Goods in 2025
Let’s take a look at the updated GST rates for different categories of goods:
Essential Goods – 0% GST
- Fresh fruits and vegetables
- Unbranded cereals, flour, and pulses
- Milk and curd
- Sanitary napkins
- Books and printed materials
- Handloom products
5% GST
- Sugar, tea, coffee (unbranded)
- Footwear (below ₹1,000)
- Edible oils and packaged foods
- Life-saving medicines
- Agarbatti (incense sticks)
12% GST
- Processed food items (ketchup, sauces)
- Mobile phones and accessories
- Fruit juices
- Solar water heaters
- Garments above ₹1,000
18% GST
- Shampoo, soaps, and cosmetics
- AC restaurants
- Paints and varnishes
- Refrigerators and washing machines
- Online education services
28% GST
- Luxury cars and SUVs
- Air conditioners
- Cigarettes and tobacco
- Aerated drinks
- Personal aircraft, yachts
GST on Services in 2025
Services are broadly categorized under 5%, 12%, 18%, and 28% GST rates.
0% or Exempt Services
- Education services by recognized institutions
- Health care by registered medical professionals
- Public transportation (metro, buses)
5% GST
- Transportation of goods by rail or road
- Non-AC restaurant services
- Tour operator services (with no input tax credit)
12% GST
- AC transportation services (e.g., Volvo buses)
- Works contracts (govt-sponsored housing projects)
- Online education platforms (EdTechs)
18% GST
- Banking and financial services
- Insurance premiums
- Telecom services
- AC restaurants
- Software development and SaaS products
28% GST
- Casino and gambling services
- Race clubs and entertainment parks
- Movie theatres (luxury screens)
Items with Reduced GST Rates in 2025
The GST Council has continued its efforts to rationalize taxes to reduce the burden on consumers and small businesses.
| Item | Previous Rate | New Rate |
|---|---|---|
| EV Chargers | 5% | 3% |
| Health Insurance (low income) | 18% | 12% |
| Fertilizers | 12% | 5% |
| Online Education | 18% | 12% |
| Hotel Rooms (₹1,000–₹1,500) | 18% | 12% |
GST Council's Vision for 2025
The GST Council plans several major changes in 2025:
- Simplification of Returns – Fewer return forms and improved GSTN portal functionality.
- Revised Thresholds – Limit for GST registration expected to rise for service providers from ₹20 lakh to ₹30 lakh.
- Improved Refund Processing – Faster turnaround with automated checks and mobile app notifications.
- New GST App for Small Traders – For easy invoice generation and return filing.
- Digital Wallet System – To make input credit tracking easier.
Sector-Wise GST Highlights (2025)
- Most platforms must register for GST, even if turnover is below ₹20 lakh.
- TCS (Tax Collected at Source) still applicable at 1%.
???? Real Estate
- Affordable housing: 1% GST (no ITC)
- Other housing: 5% GST (no ITC)
???? Automotive
- Small cars: 18%
- SUVs and luxury cars: 28% + Cess (up to 22%)
???? Manufacturing
- Goods requiring multiple components (like electronics): Avg 18%
- Machinery & capital goods: 18% (input credit available)
Items Still Outside GST in 2025
Some items remain outside the GST net:
- Petrol, diesel, natural gas
- Alcohol for human consumption
- Stamp duty and property registration
These continue to be taxed by state governments, although discussions are ongoing to include petroleum products under GST in the near future.
Tips for Businesses to Stay Compliant in 2025
- Update accounting software with revised GST rates.
- Ensure e-invoicing for B2B supplies above ₹5 crore turnover.
- File monthly/quarterly returns on time (GSTR-1, GSTR-3B).
- Maintain proper documentation to claim Input Tax Credit (ITC).
- Monitor rate notifications on the GST portal regularly.
Conclusion
Understanding the updated GST rates in 2025 is crucial for everyone – from manufacturers and retailers to service providers and consumers. The changes introduced aim to reduce tax burden on essential goods, promote digital and green growth, and simplify the system.
As GST continues to evolve, keeping yourself updated ensures compliance and better financial planning. You can always consult a tax expert or GST consultant for personalized advice based on your industry.
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