GST Council New GST Rates 2025 – All You Need to Know

Introduction

If you run a business, shop for daily needs, or simply follow the economy, you’ve probably noticed how often the term GST Council new GST rates makes the news. The Goods and Services Tax (GST) is India’s most significant tax reform in decades, and the GST Council plays a vital role in deciding what percentage of tax applies to different goods and services.

Every few months, the Council meets to review existing rates, reduce tax where necessary, and sometimes increase it to balance revenue needs. In 2025, several important changes were introduced, affecting everything from food items and household appliances to online gaming and real estate.

This article is your complete guide to the new GST rates in 2025—explained in simple words, with sector-wise details, examples, and the impact on both businesses and consumers.

What is GST in Simple Words?

GST stands for Goods and Services Tax. It is a single indirect tax applied across India, replacing older taxes like VAT, excise duty, and service tax.

Instead of paying multiple taxes at different stages, GST ensures you only pay one unified tax at the final point of consumption. That’s why it’s called a destination-based tax.

There are three main types:

• CGST (Central GST): Collected by the central government

• SGST (State GST): Collected by the state government

• IGST (Integrated GST): Applied to interstate transactions

What is the GST Council and Why is it Important?

The GST Council is the decision-making body that reviews tax rates and policies under GST. It is headed by the Union Finance Minister and includes finance ministers from all states and union territories.

The Council’s responsibilities include:

• Fixing GST rates

• Deciding exemptions and special categories

• Reviewing industries’ requests for relief

• Simplifying GST compliance for businesses

In short, if you want to know why the GST rate of your favorite snack dropped, or why online gaming suddenly became more expensive, the answer is – the GST Council decided it.

GST Slabs in India – Quick Recap

Currently, GST is divided into five major slabs:

• 0% (Nil): Essential items like milk, fresh fruits, vegetables, books

• 5%: Mass consumption items like medicines, packaged food, footwear under ₹1000

• 12%: Processed foods, mobile phones, intermediate goods

• 18%: Most services, electronics, restaurants, financial services

• 28%: Luxury goods, tobacco, high-end vehicles, aerated drinks

On top of this, some goods carry a cess (extra tax) like tobacco and luxury cars. Petroleum, alcohol, and electricity remain outside GST for now.

GST Council New GST Rates 2025 – Latest Changes

The 2025 GST Council meetings introduced some key changes to support middle-class consumers, promote sustainable industries, and boost government revenue from luxury spending.

🥗 1. Food & Beverages

• Ready-to-eat packaged food: Reduced from 18% to 12%

• Frozen fruits & vegetables: Reduced from 12% to 5%

• Aerated drinks: Remain at 28% + cess

✅ Impact: Consumers save money on everyday packaged foods, while luxury drinks stay expensive.

👕 2. Consumer Goods

• Footwear above ₹1000: Reduced from 18% to 12%

• Household appliances (refrigerators, washing machines): Reduced from 28% to 18%

• Electric fans: Now taxed at 12% instead of 18%

✅ Impact: Lower tax means cheaper appliances and footwear, making life easier for the middle class.

🚗 3. Automobiles & EVs

• Electric Vehicles (EVs): Continue at 5% to encourage adoption

• Hybrid Cars: Reduced from 28% to 18%

• Luxury Cars: Still at 28% + cess

✅ Impact: EVs and hybrids get a boost, but luxury buyers continue to pay a premium.

🏠 4. Real Estate & Housing

• Affordable Housing: 1% GST (without ITC)

• Other housing projects: 5% GST (without ITC)

• Cement: Remains high at 28%

✅ Impact: Good news for homebuyers, but construction costs remain high due to cement’s high tax.

🏥 5. Healthcare & Pharma

• Essential medicines: 0–5%

• Medical equipment: 12%

• Health insurance: 18%

✅ Impact: Essential medicines remain affordable, but insurance premiums are still taxed heavily.

🏨 6. Services Sector

• Hotel rooms below ₹1000/day: No GST (earlier 12%)

• Hotel rooms between ₹1000–₹7500/day: 12%

• Hotel rooms above ₹7500/day: 18%

• Online gaming, casinos, betting: Now taxed at 28%

• Telecom & financial services: 18%

✅ Impact: Tourism gets a push with reduced hotel taxes, but gaming enthusiasts pay more.

Why Are GST Rates Revised?

The GST Council doesn’t change rates just for the sake of it. Some of the main reasons include:

• To control inflation and make essentials cheaper

• To boost specific industries (like EVs and tourism)

• To ensure fair revenue collection for states and center

• To adjust with changing consumption trends

• To comply with industry demands and petitions

Sector-Wise GST Rate Table (2025 Updates)