The new GST slab structure introduced in 2025 simplifies the previous multiple tax slabs into three main rates: 5%, 18%, and a special 40% slab for luxury and sin goods. This reform, effective from September 22, 2025, abolishes the 12% and 28% slabs present earlier. Key details of the new GST slabs are:

• 5% slab for essentials and many everyday items such as packaged food, toiletries, medicines, and some agricultural products.
• 18% slab for standard goods and services including appliances, TVs, cement, and smaller cars.
• 40% slab introduced exclusively for sin goods and luxury items like tobacco products, high-end cars, and cigarettes.
• The 0% (exempt) category continues for some fundamental essentials like fresh food items.
• Life and health insurance services have been made fully GST-exempt.

This change aims to reduce complexity in the GST system, lower inflationary pressure, make goods cheaper for consumers, and stimulate demand during festive seasons. It also removes cess for many products by replacing them with the flat 40% rate on sin and luxury goods.