Finance Minister Nirmala Sitharaman has announced major changes to India’s GST after the 56th GST Council meeting in New Delhi. This new “Next-Gen GST Reform” simplifies the tax system by cutting down the number of GST slabs to just two main rates — 5% and 18%.

One of the standout changes is that all individual life and health insurance policies will now be completely exempt from GST. The minister called this a “historic Diwali gift” for everyone.

The new rates will kick in from September 22, 2025. Some products like cigarettes and tobacco will keep their current rates for now, with updates coming later.

Medicines and most medical devices will be taxed at a lower 5% rate. For vehicles, small petrol, LPG, and CNG cars with engines up to 1200 cc and diesel cars up to 1500 cc will see GST drop from 28% to 18%. Larger cars and SUVs will face a higher 40% tax. Motorcycles up to 350 cc will be taxed at 18%, and those above that at 40%.

Home appliances like air conditioners and dishwashers will now carry 18% GST instead of 28%, and TVs will have a uniform 18% rate, no matter the size. All types of batteries will also be taxed at 18%.

If you have goods already in transit when the new rates start, there’s no need to cancel or redo e-way bills — the current ones remain valid.

All Indian breads — roti, paratha, even pizza bread — are now exempt from GST to simplify things. Paneer, whether packaged or not, is also exempt now to support small producers.

Carbonated fruit drinks will see their GST rise to 40%, replacing an earlier compensation cess but keeping the overall tax the same.

Services like salons, gyms, yoga centres, and health clubs will now be taxed at 5%, down from 18%.

UHT milk remains exempt, and plant-based milk like soya will now have a 5% GST, reduced from higher rates earlier.

Passenger transport services by road and air will mostly fall under 5% or 18% GST depending on input credit options and travel class. Goods transport will follow a similar pattern.

In short, these changes aim to make GST simpler and fairer, lowering taxes on essentials while increasing them on luxury and “sin” goods. The goal is to ease the burden on everyday buyers and create a balanced tax system that works better for both businesses and consumers.