The GST Council rationalised tax structure into: 5% (merit), 18% (standard) and a special 40% de-merit slab for selected sin/Super luxury goods & services.
As per the 56th GST Council recommendations, changes in GST rates (goods & services) — other than cigarettes, chewing tobacco (e.g., zarda), unmanufactured tobacco and beedi — will be effective from 22 September 2025.
For the specified goods (cigarettes, chewing tobacco like zarda, unmanufactured tobacco and beedi) the existing GST rates and compensation cess will continue to apply; new rates for these items will be implemented later, only after the Government deems the compensation-cess-related loan & interest liabilities discharged.
The tables below list all items placed in the 40% slab with their rate before and rate after
Goods moved to 40%:
| S. No. | HSN / Tariff item | Description | GST rate Before | GST rate After |
|---|---|---|---|---|
| 1 | 2106 90 20 | Pan masala* | 28% | 40%* |
| 2 | 2202 10 | All goods (including aerated waters), containing added sugar or other sweetening matter or flavoured | 28% | 40% |
| 3 | 2202 99 90 | Caffeinated Beverages | 28% | 40% |
| 4 | 2202 | Carbonated beverages of fruit drink or carbonated beverages with fruit juice | 28% | 40% |
| 5 | 2202 91 00 / 2202 99 | Other non-alcoholic beverages | 18% | 40% |
| 6 | 2401 * | Unmanufactured tobacco; tobacco refuse [other than tobacco leaves]* | 28% | 40% |
| 7 | 2402 * | Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes* | 28% | 40% |
| 8 | 2403 * | Other manufactured tobacco and tobacco substitutes; homogenised/reconstituted tobacco; extracts/essences* | 28% | 40% |
| 9 | 2404 11 00 * | Products containing tobacco or reconstituted tobacco and intended for inhalation without combustion* | 28% | 40% |
| 10 | 2404 19 00 * | Products containing tobacco or nicotine substitutes and intended for inhalation without combustion* | 28% | 40% |
| 11 | 8703 | Motor cars and other motor vehicles principally designed for the transport of persons, including station wagons and racing cars, [other than wherein 28% to 18% is mentioned ] | 28% | 40% |
| 12 | 870340, 870360 | Motor vehicles with both spark-ignition internal combustion reciprocating piston engine and electric motor as motors for propulsion, of engine capacity exceeding 1200cc or of length exceeding 4000 mm | 28% | 40% |
| 13 | 870350, 870370 | Motor vehicles with both compression-ignition internal combustion piston engine [diesel-or semi diesel] and electric motor as motors for propulsion, of engine capacity exceeding 1500cc or of length exceeding 4000 mm | 28% | 40% |
| 14 | 8711 | Motor cycles of engine capacity exceeding 350 cc | 28% | 40% |
| 15 | 8802 | Aircraft for personal use | 28% | 40% |
| 16 | 8903 | Yachts and other vessels for pleasure or sports | 28% | 40% |
| 17 | 9302 | Revolvers and pistols (other than heading 9303/9304) | 28% | 40% |
| 18 | 9614 | Smoking pipes (incl. pipe bowls), cigar/cigarette holders, parts thereof | 28% | 40% |
What is the revised GST rate on small petrol, LPG, CNG, or diesel cars? What is covered under small cars?
The GST rate on all small cars has been reduced from 28% to 18%. For the purposes of GST, small cars means Petrol, LPG, or CNG cars with engine capacity up to 1200 cc and length up to 4000 mm and Diesel cars with engine capacity up to 1500 cc and length up to 4000 mm.
What is the new GST rate on vehicles exceeding 1500 cc or length exceeding 4000mm? What is the GST rate on utility vehicles?
The GST rate on all mid-size and large cars i.e vehicles exceeding 1500 cc or length exceeding 4000mm is 40%. Further, motor vehicles in the category of Utility Vehicles, by whatever name called including Sports Utility Vehicles (SUV), Multi Utility Vehicles (MUV), Multi-purpose Vehicles (MPV) or Cross-Over Utility Vehicles (XUV), with an engine capacity exceeding 1500 cc, length exceeding 4000 mm, and ground clearance of 170 mm and above, will also attract a GST rate of 40% without any cess.
Currently mid-size and big cars attract 28% GST and compensation cess ranging from 17-22% with the overall tax incidence ranging from 45-50%. What will be the new rate?
The new GST rate on mid-size and big cars will be 40% with no compensation cess
Services moved to 40%:
| S. No. | Heading / Code (as in your text) | Description | GST rate Before | GST rate After |
|---|---|---|---|---|
| 1 | 9973 | Leasing or rental services, without operator, of goods | 28% (with ITC) | 40% (with ITC) |
| 2 | — | Admission to casinos, race clubs, any place having casinos or race clubs, or sporting events like IPL | 28% (with ITC) | 40% (with ITC) |
| 3 | — | Services by a race club for licensing of bookmakers in such club | 28% (with ITC) | 40% (with ITC) |
| 4 | — | Specified “Actionable Claims” defined as goods — (betting, casinos, gambling, horse racing, lottery, online real-money gaming) | 28% (with ITC) | 40% (with ITC) |
Tobacco & Cigarettes — special implementation clause
- For specified goods — cigarettes, chewing tobacco (zarda), unmanufactured tobacco and beedi — the existing rates of GST and compensation cess will continue to apply.
- The new (40%) rates for these specified tobacco items will be implemented at a later date, to be notified only after the government has discharged the entire loan & interest liabilities arising from compensation cess.
- In short: deferred implementation for tobacco and specified smoke products (they remain on existing rate + cess for now).
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