GST Rate Revision FAQs, Detailing Indian Breads, Milk, Paneer, Honey, Agricultural Machinery & Personal Care Items

The 56th meeting of the GST Council in New Delhi has approved a wide set of tax rate changes across goods and services. Most of these revisions will take effect from 22 September 2025, while specific items such as cigarettes, zarda, unmanufactured tobacco and beedis will shift later, once cess liabilities are settled. To help businesses, taxpayers and consumers, here are the key FAQs released after the meeting.

When will the new GST rates take effect?

The revised rates will apply from 22 September 2025 for most goods and services. Cigarettes, zarda, unmanufactured tobacco and beedis will be covered from a date to be separately notified.

Is there any change in the registration threshold under GST?

No. The threshold for registration under the CGST Act remains unchanged.

Where will the revised rates be notified?

All changes will be published through official rate notifications on the CBIC website.

How will supplies made before 22 September but invoiced later be treated?

If goods or services are supplied before the rate change but invoiced afterwards, the applicable rate will depend on when payment is received:

• If payment is received after the change, the date of payment or invoice (whichever is earlier) will apply.
  
  
  
• If payment is received before the change, the old rate will apply.
  
  
  

What happens if advances were received before supply?

The applicable rate will be decided as per time-of-supply provisions in Section 14 of the CGST Act.

Can input tax credit still be claimed on purchases made before the new rates apply?

Yes. A registered person can claim ITC on tax paid as per the rate prevailing at the time of purchase.

What about IGST on imports?

Imports will attract IGST at the revised GST rates unless exempted separately.

If my outward supply is now at a reduced rate, can I still use ITC at higher rates?

Yes. ITC already availed in the electronic credit ledger can be used to discharge future liabilities.

What if my supply becomes exempt after 22 September?

If supplies are exempted, ITC claimed earlier must be reversed for transactions made after the effective date.

Can refund of accumulated ITC be claimed due to inverted duty structure?

Refund is available when inputs are taxed at a higher rate than outputs. However, refund is not allowed merely because a particular good has been moved to a different rate slab over time.

Do I need to change e-way bills for goods in transit when rates change?

No. E-way bills already generated will remain valid for their original validity period.

Has GST been reduced on milk and plant-based drinks?

Yes. UHT milk is now exempt. Plant-based milk drinks, including soya milk, are reduced to 5% (earlier they attracted higher rates).

Why was GST raised to 40% on non-alcoholic beverages?

The higher rate was applied to ensure uniformity and to prevent misclassification disputes.

What is the new rate for Indian breads?

All Indian breads, regardless of type, are exempt.

Why were rates raised on carbonated fruit beverages?

The increase was made to offset the discontinuation of compensation cess, keeping the overall tax incidence unchanged.

How are paneer and other cheeses treated?

Paneer in loose form continues to be exempt. Packaged paneer is now taxed differently, with relief measures in place to support small-scale producers.

Why is natural honey taxed differently from artificial honey?

The policy is designed to encourage natural honey production and protect beekeepers.

Has GST on agricultural machinery been reduced?

Yes. Rates have been reduced from 12% to 5% on items such as sprinklers, threshers, drip irrigation systems and other similar equipment.

Why not fully exempt agricultural machinery?

A full exemption would remove ITC benefits for manufacturers, raise costs and ultimately make machinery more expensive for farmers. A 5% concessional rate balances affordability and credit flow.

What about medicines and medical devices?

Essential medicines continue at a concessional 5% rate. Medical devices have been reduced to 5% to lower healthcare costs.

What are the revised rates on vehicles?

• Small cars: 18%

Mid-size and large cars, SUVs, MUVs, XUVs with engine capacity above 1500 cc or length above 4000 mm: 40%

Utility vehicles (engine >1500 cc, length >4000 mm, ground clearance ≥170 mm): 40% without any cess

Motorcycles up to 350 cc: 18%

Motorcycles above 350 cc: 40%

Buses, ambulances, lorries and trucks: 18%

Bicycles and parts: 5%

How are electronics and household appliances taxed?

Air-conditioners, dishwashers, and all televisions and monitors are now taxed at 18%. Batteries under heading 8507 are uniformly taxed at 18%.

What about renewable energy equipment?

GST has been reduced from 12% to 5% on renewable energy devices to encourage adoption. Refunds will be available in cases of inverted duty.

Have wellness and personal care items been revised?

Yes. Toilet soap bars, shampoos, shaving creams, face powders, toothbrushes and toothpaste are now taxed at 5%.

How are insurance services taxed?

Individual life and health insurance policies, including ULIPs, term plans and family floaters, are exempt from GST.

What about beauty and fitness services?

Salons, gyms, yoga centres, spas and wellness facilities are now taxed at 5% without ITC, down from the earlier 18%.

How are passenger and goods transport services treated?

• Passenger transport: 5% without ITC, or 18% with ITC (optional).
  
  
  
• Air travel: 5% for economy class, 18% for higher classes.
  
  
  
• Goods transport by road (GTA): 5% without ITC, or 18% with ITC.
  
  
  
• Container train operators: Option of 5% or 18%.

Multimodal transport: 5% if no air leg is involved, otherwise 18%.

What are the rates for job work services?

• Pharmaceuticals, hides and skins: 5% with ITC.
  
  
  
• Alcoholic liquor: 18%.
  
  
  
• Other job work services: 18%.
  
  

How are entertainment and gaming services taxed?

• Betting, casinos, gambling, online gaming, horse racing and lottery: 40%.
  
  
  
• Admission to IPL matches: 40%.

Recognised sporting events: exempt up to ₹500, taxed at 18% for tickets above ₹500.

Why were exemptions avoided in some sectors?

The Council stated that exemptions would break the ITC chain, increasing production costs and consumer prices. Instead, concessional rates were used to balance relief for consumers with the need to protect domestic producers.