GST 2.0: These items will cost more from tomorrow
What's the story
The Goods and Services Tax (GST) Council, led by the Indian central government, is set to implement a major reform from Monday, 22 September 2025. The current four-slab GST structure will be replaced with a simplified two-tier system. Under this new system, goods sold in India will be taxed at either 5% or 18%, depending on their nature. However, the revised GST structure also introduces a special 40% tax slab, replacing the mandatory Compensation Cess levied on certain products.
Scenario
Luxury cars, 2-wheelers to see price hike
Under the new system, 'sin goods' like cigarettes and pan masala will be taxed at a whopping 40%. A similar tax has been slapped on luxury cars with an internal combustion engine (ICE) capacity of over 1,200cc and a length exceeding four meters. This category includes SUVs or MPVs that were earlier taxed at a 28% GST rate plus a 22% Cess charge on top of the ex-showroom price. The new tax structure will also apply to two-wheelers above 350cc.
Beverage tax
Soft drinks will also get costlier
Soft drinks and other non-alcoholic beverages, such as Coca-Cola, Pepsi, Mountain Dew, and Fanta, will see a price hike under the new GST structure. The central government has increased the GST rate to 40% from its previous level of 28%. This tax slab will also cover aerated sugary drinks and carbonated fruit drinks with fruit juice.
Luxury goods
Premium consumer durables, restaurant dining to attract higher GST rate
The new GST structure will also impose an 18% tax on luxury goods and services. This includes restaurant dining, especially at air-conditioned and premium outlets, and consumer durables such as refrigerators, washing machines, and air conditioners. Beauty and grooming services at salons/spas, as well as premium smartphones/imported gadgets, will also attract the higher 18% slab from September 22.