The GST Council's rate restructuring, effective from 22 September 2025, is the most significant simplification of India's GST rate schedule since the tax was introduced. The old four-slab structure — 5%, 12%, 18%, and 28% — has been reduced to two primary slabs, 5% and 18%, with a new 40% rate reserved for a short, specific list of luxury and sin goods. The 12% and 28% slabs no longer exist as general categories.
For most businesses, this means every product or service you sell or buy needs to be re-checked against the new schedule. An item that sat at 12% previously has moved to either 5% or 18% depending on the specific HSN classification the Council assigned it to — there's no blanket rule that all 12% items became 5%, or all became 18%. The same applies to the old 28% slab: most goods moved to 18%, but the highest-value or luxury-adjacent items were reassigned to the new 40% rate instead.
A specific and welcome change: individual health and life insurance premiums are now fully GST-exempt, down from 18%. This matters directly for HR and finance teams managing group insurance benefits, and for insurance advisory practices generally.
For manufacturers and traders — particularly in sectors like Surat's textile and diamond trade where classification has historically been a source of dispute — this is a genuine opportunity to correct any historical misclassification while re-mapping is already underway, rather than treating this as a mechanical find-and-replace exercise.
What we recommend checking: re-verify GST rates on your top-selling SKUs against the revised schedule rather than assuming last year's mapping still holds; confirm your input tax credit (ITC) positions haven't shifted where your inputs and outputs now sit in different slabs than before; and review your invoicing software or ERP system's tax master to confirm it reflects the new rates — vendors are still finding stale rate tables months after the change.
If you're unsure whether a specific product line's classification changed, this is exactly the kind of question worth raising with your GST advisor directly rather than guessing — a wrong classification carries real exposure on both the sales and input credit side.