India GST Slab Overhaul 2025: 5% & 18% Explained (Two-Slab GST Guide)

Simple, fair, efficient. What the new GST structure means for prices, industries, and your business.

Introduction: A Simpler GST for India

India is preparing for a landmark tax reform—moving from four GST slabs to two primary rates (5% and 18%). The 12% and 28% slabs are proposed to be scrapped, while luxury/sin goods may carry a separate higher rate. Personal health and life insurance premiums may receive relief via exemption (subject to notification). The final decision rests with the GST Council. Always verify with official CBIC/GSTN notifications before billing.

The New GST Structure: What’s Changing

• Two primary slabs: 5% and 18% replacing 5%, 12%, 18%, 28%.
• 12% → 5%: Broad relief for many consumer goods.
• 28% → 18%: Several durables/electronics become more affordable.
• Luxury/Sin goods: May attract a special top rate (~40%).
• Insurance relief: Health & life premiums may be exempt.

Who Benefits? Sector-wise Impact

FMCG & Essentials

Items that were at 12% move to 5%, driving price drops and potentially stronger rural and mass-market demand.

Consumer Durables & Electronics

Products like TVs, ACs, and appliances moving from 28% to 18% could see meaningful affordability gains.

Automobile Sector

Mass-market vehicles benefit at 18%, while premium/luxury may still face a higher top rate.

Insurance & Healthcare

If exemptions are notified, policy costs drop and coverage penetration can widen.

MSMEs & Startups

Fewer slabs mean simpler classification, fewer disputes, smoother ITC matching, and easier invoicing.

Quick Comparison Table

Category	Old Slab	New Slab	Effect
Everyday FMCG	12%	5%	Lower MRPs, demand boost
Electronics/Durables	28%	18%	Improved affordability
Mass-market Autos	Higher incidence	18%	Better conversions
Luxury & Sin goods	28% + cess	~40%	Premium positioning intact
Insurance	GST applicable	Potential exemption	Lower premium

What Businesses Should Do Now

• Re-price SKUs: Prepare new price lists.
• Update ERP/POS: Map new tax codes.
• Communicate: Plan marketing for price pass-through.
• Cash-flow & ITC: Monitor reconciliations.
• Insurers: Ready product repricing.

GST Reform Roadmap

1. GoM recommendation (5% & 18%).
2. GST Council approval.
3. CBIC notification.
4. Roll-out (expected festive season).

“Two slabs, one cleaner system — India’s GST is going flat!”

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Long-tails: Will 12% GST items become 5%? Which goods move from 28% to 18%? GST exemption on health insurance.