Explainer: GST New Rates in India and Which Industries are Raising Concerns

The GST Council announced on Wednesday the changes to the Goods and Services Tax (GST) rates, which will come into effect on September 22 this year. The changes are likely to impact a wide range of goods and services, where the government has emphasised "simplifying the tax structure". 

While many everyday food items will see a tax reduction from 18% to 5%, the sin items gutkha, tobacco and related products, and cigarettes will remain at 40%. 

Since the announcement, while many industries have welcomed the slabs, concerns have also been raised by various sectors. 

Concerns being flagged

In a report, casino operators in Goa fear that a 40% Goods and Services Tax (GST) levy on casinos would significantly hamper the industry, which will lead to a decline in footfall at casinos, impediments to fresh investment and a potential threat to “thousands of jobs”. Before this, Casinos earlier came under the 28% GST slab on the full face value of bets.

Secondly, in its latest research report, the State Bank of India (SBI) has mentioned that the reforms in GST through a reduction in rates will cause a minimal revenue loss of Rs. 3,700 crore. As per the government's estimation, the net fiscal impact of GST rates rationalisation will be Rs 48,000 crore on an annualised basis. As per the SBI report, the minimal revenue loss is estimated at Rs. 3,700 crore, given the growth and consumption boost, and will have no impact on the fiscal deficit.

Retailers Association of India (RAI) and Clothing Manufacturers Association of India have also claimed that garments priced above Rs. 2,500, which are consumed in large numbers by the commoner and the middle class, will hurt middle-class affordability. 

Talking to Local Samosa, Vikash Pacheriwal, Co-Founder, Raisin, says, "The new GST structure risks classifying middle-class fashion as ‘luxury’. Garments above Rs. 2,500 are not indulgences—they are part of daily wear, celebrations, and weddings. Imposing an 18% tax not only raises costs for consumers but also creates an uneven playing field. While compliant retailers and organised players will suffer, the unorganised sector may thrive on loopholes. This move risks discouraging fair competition, hurting jobs, and slowing the growth of India’s textile industry. We urge the government to re-evaluate and implement a more balanced, rational tax policy." 

What all has come down from 18% to 5%?

The products that will see a decrease from 18% to 5% include Malt (roasted or not), Bidi wrapper leaves (tendu), Indian katha, Margarine, Linoxyn, Glycerol (crude), Vegetable waxes, beeswax, spermaceti, Degras and residues of wax/fats, Other sugars, syrups, caramel, Cocoa butter, fat, oil, Cocoa powder, Chocolates, Malt extract, food preparations, Pastry, cakes, biscuits and other bakers’ wares, communion wafers, Corn flakes, bulgar wheat, FRK, Cakes, biscuits, pastries (not bread/roti), Soups and broths, Ice cream, edible ice, Waters (mineral, aerated, unflavoured, no added sugar), Plant-based milk drinks, Sulphuric acid, Nitric acid, Ammonia, Talcum powder, face powder, Hair oil, shampoo, Dental floss, toothpaste, Shaving cream, shaving lotion, aftershave, Toilet Soap (other than industrial soap) in the form of bars, cakes, moulded pieces or shapes, Rear tractor tyres and tubes,  Paper Sacks/Bags and biodegradable bags, Glassware of a kind used in households, decoration, and indoor ornaments, Beauty and wellness services (salons, parlours, spas, ayurvedic massage centres), Fitness centres, gyms, yoga studios. 

What all has come down from 12% to 5%?

Items in this category include Live horses, Condensed milk, Butter, ghee, butter oil, dairy spreads, Cheese, Brazil nuts (dried),  Other dried nuts (almonds, hazelnuts, chestnuts, pistachios, pine nuts, etc.), Dates, figs, pineapples, avocados, guavas, mangoes (dried), Citrus fruits (oranges, mandarins, grapefruit, lemons, limes, dried), Other dried fruit and nut mixtures (except tamarind), Starches, inulin, Pig and poultry fat, Bovine, sheep, goat fats, Lard stearin, lard oil, tallow oil, Fish and marine mammal oils, Wool grease, lanolin, Other animal fats and oils, Hydrogenated animal or microbial fats and oils, Chemically modified fats and oils (inedible), Sausages and similar meat products, Preserved meat and fish extracts and juices of meat, fish, crustaceans Refined sugar (flavoured, coloured, cubes), Pasta, noodles, couscous, Extruded savoury products, Vegetables preserved in vinegar or acids, Tomato and mushroom preserves, Jams, jellies, marmalades, Coconut water (packaged), Yeasts, baking powders, Sauces, condiments, seasonings, mungodi and batters, Namkeens, bhujia, mixtures (packaged), Diabetic foods, Drinking water, Soya milk drinks, Fruit pulp or fruit juice-based drinks (non-carbonated), Beverages containing milk, Marble and travertine blocks, Granite blocks,  Anaesthetics, Potassium Iodate, SteamIodine, Medical-grade oxygen, medicinal grade hydrogen peroxide, Micronutrients under Fertilizer Control Order 1985, Gibberellic acid, Natural menthol, all other drugs and medicines (including Fluticasone Furoate + Umeclidinium + Vilanterol, Brentuximab Vedotin, Ocrelizumab, Pertuzumab, Pertuzumab + Trastuzumab, Faricimab),  Glands and other therapeutic organs/substances, Animal blood, antisera, toxins, cultures, immunological products, Medicaments (multi-ingredient, Ayurvedic, Unani, Siddha, homoeopathic, Bio-chemic), Medicaments (packaged for retail sale, including transdermal systems), Wadding, gauze, bandages, dressings, plasters among others. 

What all has come down to nil?

Ultra-High Temperature (UHT) milk, Chena or paneer (pre-packaged and labelled), Pizza bread, Roti, chapathi, khakhra, Paratha, parotta, other Indian breads, Erasers, Paper Sacks/Bags and biodegradable bags, Glass bangles (without gold/silver), Pencils, crayons, pastels, chalk, Charitable hospital services and trusts (health, education), Insurance premiums (life, health, general insurance) are under the nil category.

What has been raised to 40%?

Pan masala, all flavoured or sweetened waters (including aerated waters), Carbonated fruit beverages, Caffeinated beverages, Unmanufactured tobacco, tobacco refuse (other than leaves), Cigars, cheroots, cigarillos, cigarettes, Other manufactured tobacco & substitutes, Tobacco/nicotine products for inhalation (without combustion), Motorcycles above 350cc, SUVs and luxury cars, Revolvers and pistols, Aircraft (private jets, business aircraft, helicopters), Yachts and pleasure vessels, Cinema tickets (above Rs.100).