GST rate cut brings relief on everyday item; check FAQs on new rate structure
Everyday household items will see some of the biggest reductions. Hair oil, soaps, shampoos, toothbrushes, tableware, and kitchenware will now be taxed at 5% instead of 18%. Basic food products like UHT milk, paneer, and Indian breads have been fully exempted, dropping from 5% to zero.
- Sep 3, 2025,
- Updated Sep 3, 2025 11:28 PM IST
Finance Minister Nirmala Sitharaman on Wednesday unveiled the most significant GST overhaul since its launch in 2017, introducing a streamlined two-slab structure under what is being called “GST 2.0.” The reform slashes rates across essential goods, medicines, and automobiles, while creating a higher slab for luxury and sin products.
Everyday household items will see some of the biggest reductions. Hair oil, soaps, shampoos, toothbrushes, tableware, and kitchenware will now be taxed at 5% instead of 18%. Basic food products like UHT milk, paneer, and Indian breads have been fully exempted, dropping from 5% to zero. Packaged foods such as namkeen, bhujiya, sauces, pasta, cornflakes, butter, and ghee will also move into the 5% bracket—making cooking and snacking more affordable.
To address common concerns, the Finance Ministry has released the following FAQs on the new GST rates:
FAQs on GST Revised Rates
Q: UHT (Ultra High Temperature) milk has been exempted. Does exemption to UHT milk also cover plant-based milk? All dairy milk, other than UHT milk, were already exempt from GST. Hence UHT milk has been exempted to provide the same tax treatment to similar goods. Plant-based milk drinks, except soya milk drinks, attracted 18% GST while soya milk drink attracted 12%. The GST rate on plant-based milk drinks and soya milk drinks has now been reduced to 5%.
Q: What is the reason for 40% rate on ‘other non-alcoholic beverages’? The principle behind the recent rate rationalisation exercise is to keep similar goods at the same rate to avoid issues of misclassification and disputes. This has also been applied to ‘other non-alcoholic beverages’.
Q: What is the GST rate on food preparations not elsewhere specified in any of the schedules? Food preparations not elsewhere specified will attract a GST rate of 5%.
Q: What is the reason for revising GST rate only on specified varieties of Indian bread? Bread was already exempt while pizza bread, roti, porotta, paratha, etc. attracted different rates. All Indian breads, by whatever name called, have been exempted even though only a few goods have been mentioned by way of illustrative example.
Q: Why has the rate of carbonated beverages of fruit drink or carbonated beverages with fruit juice been increased? These goods attracted compensation cess in addition to GST. Since it has been decided to end the compensation cess levy, the tax has been increased to maintain the pre-rate rationalisation level of tax.
Q: Why is there a different tax treatment between paneer and other cheese? Prior to rate rationalisation, paneer sold in other than pre-packaged and labelled form already attracted nil rate. Therefore, the changes have been made only in respect of paneer supplied in pre-packaged and labelled form. Paneer is an Indian cottage cheese, mostly produced in the small-scale sector. The measure is intended to promote Indian cottage cheese.
Q: What is the reason for differential tax treatment for natural honey and artificial honey? This is intended to promote natural honey.
Finance Minister Nirmala Sitharaman on Wednesday unveiled the most significant GST overhaul since its launch in 2017, introducing a streamlined two-slab structure under what is being called “GST 2.0.” The reform slashes rates across essential goods, medicines, and automobiles, while creating a higher slab for luxury and sin products.
Everyday household items will see some of the biggest reductions. Hair oil, soaps, shampoos, toothbrushes, tableware, and kitchenware will now be taxed at 5% instead of 18%. Basic food products like UHT milk, paneer, and Indian breads have been fully exempted, dropping from 5% to zero. Packaged foods such as namkeen, bhujiya, sauces, pasta, cornflakes, butter, and ghee will also move into the 5% bracket—making cooking and snacking more affordable.
To address common concerns, the Finance Ministry has released the following FAQs on the new GST rates:
FAQs on GST Revised Rates
Q: UHT (Ultra High Temperature) milk has been exempted. Does exemption to UHT milk also cover plant-based milk? All dairy milk, other than UHT milk, were already exempt from GST. Hence UHT milk has been exempted to provide the same tax treatment to similar goods. Plant-based milk drinks, except soya milk drinks, attracted 18% GST while soya milk drink attracted 12%. The GST rate on plant-based milk drinks and soya milk drinks has now been reduced to 5%.
Q: What is the reason for 40% rate on ‘other non-alcoholic beverages’? The principle behind the recent rate rationalisation exercise is to keep similar goods at the same rate to avoid issues of misclassification and disputes. This has also been applied to ‘other non-alcoholic beverages’.
Q: What is the GST rate on food preparations not elsewhere specified in any of the schedules? Food preparations not elsewhere specified will attract a GST rate of 5%.
Q: What is the reason for revising GST rate only on specified varieties of Indian bread? Bread was already exempt while pizza bread, roti, porotta, paratha, etc. attracted different rates. All Indian breads, by whatever name called, have been exempted even though only a few goods have been mentioned by way of illustrative example.
Q: Why has the rate of carbonated beverages of fruit drink or carbonated beverages with fruit juice been increased? These goods attracted compensation cess in addition to GST. Since it has been decided to end the compensation cess levy, the tax has been increased to maintain the pre-rate rationalisation level of tax.
Q: Why is there a different tax treatment between paneer and other cheese? Prior to rate rationalisation, paneer sold in other than pre-packaged and labelled form already attracted nil rate. Therefore, the changes have been made only in respect of paneer supplied in pre-packaged and labelled form. Paneer is an Indian cottage cheese, mostly produced in the small-scale sector. The measure is intended to promote Indian cottage cheese.
Q: What is the reason for differential tax treatment for natural honey and artificial honey? This is intended to promote natural honey.