GST 2.0 FAQS: Will large cars attract cess? What rate has been set for insurance premium? Will cigarettes get costlier? Check details

GST tax rates on common use items ranging from hair oil to corn flakes, TVs, and personal health and life insurance policies were slashed after the all-powerful GST Council on Wednesday approved a complete overhaul of the tangled Goods and Services Tax regime.The GST Council approved rate overhaul by limiting slabs to 5 per cent and 18 per cent effective from September 22, the first day of Navaratri.Almost all personal use items will see rate cuts as the government looks to boost domestic spending and cushion the economic blow of the US tariffs.Here is everything to know about GST reforms:When will the changes in GST rates come into force? As per recommendations of the GST Council in its 56th meeting, the changes in GST rates on services and goods other than cigarettes, chewing tobacco products like zarda, unmanufactured tobacco and beedi will be effective from September 22, 2025.Is there any change in threshold of the registration required for goods under CGST Act, 2017? No, there is no change in threshold of the registration required for goods under CGST Act, 2017. 3. What happens to the applicable rate of tax, if I had supplied goods/services or both before the changes in GST rates come into force but the invoices were issued later? As per Section 14 (a)(i) of CGST Act, 2017, in case the goods or services or both have been supplied before the change in rate of tax, and the invoice for the same has been issued after the change in rate of tax, then the time of supply i.e. date of liability to pay tax on such supply will be as follows: i. If the payment is received after the change in rate of tax, then time of supply shall be the date of receipt of payment or the date of issue of invoice, whichever is earlier. ii. If the payment has been received before the change in rate of tax, the time of supply shall be the date of receipt of payment. What is the GST rate on medicines? Does the 5% GST rate apply on all medical devices? All drugs/ medicines have been prescribed a concessional rate of GST of 5%, except those specified at nil rate. The rate of 5% applies on all medical devices, instruments, apparatus used in medical, surgical, dental and veterinary uses other than that are exempted specifically.What is the revised GST rate on small petrol, LPG, CNG, or diesel cars? What is covered under small cars?The GST rate on all small cars has been reduced from 28% to 18%. For the purposes of GST, small cars means Petrol, LPG, or CNG cars with engine capacity up to 1200 cc and length up to 4000 mm and Diesel cars with engine capacity up to 1500 cc and length up to 4000 mm. What is the new GST rate on vehicles exceeding 1500 cc or length exceeding 4000mm? What is the GST rate on utility vehicles? The GST rate on all mid-size and large cars i.e vehicles exceeding 1500 cc or length exceeding 4000mm is 40%. Further, motor vehicles in the category of Utility Vehicles, by whatever name called including Sports Utility Vehicles (SUV), Multi Utility Vehicles (MUV), Multi-purpose Vehicles (MPV) or Cross-Over Utility Vehicles (XUV), with an engine capacity exceeding 1500 cc, length exceeding 4000 mm, and ground clearance of 170 mm and above, will also attract a GST rate of 40% without any cess. What is the GST rate on 3-wheelers? The GST rate on three-wheelers classified under HSN 8703 is 18%. It has been reduced from 28%. 29. What is the GST rate on buses and other vehicles meant to carry 10 or more persons, including the driver, such as buses? All motor vehicles designed to transport ten or more persons, including the driver, and classified under HSN 8702, will attract a GST rate of 18%. It has been reduced from 28%. 30. What is the GST rate on goods transport vehicles such as lorries and trucks? Motor vehicles designed for the transport of goods, such as lorries and trucks, classified under HSN 8704 will attract a GST rate of 18%. It has been reduced from 28%. What is the GST rate on motorcycles? Motorcycles of engine capacity upto 350 cc attract a GST rate of 18% while Motorcycles of engine capacity exceeding 350 cc attract a GST rate of 40%. 34. GST rate is 18% for motor cycles upto 350cc? Does this include 350cc motor cycles. The 40% rate is applicable only to motorcycles exceeding 350cc. Therefore the 18% rate also applies to motor cycles of 350cc or lesser than 350cc. Currently mid-size and big cars attract 28% GST and compensation cess ranging from 17-22% with the overall tax incidence ranging from 45-50%. What will be the new rate? The new GST rate on mid-size and big cars will be 40% with no compensation cess. 36. Has GST rate been reduced on bicycles and parts? The GST rate has been reduced to 5% on bicycles and its parts from 12%. What is the new GST rate on toilet soap bar? Why has a distinction been kept between liquid soap and soap in bars? The new GST rate on toilet soap bar is 5%. This is intended to lower the monthly expenditure for the lower middle class and the poorer sections of society. What is the reason for reducing GST on face powder and shampoos? Will this not benefit MNCs and luxury brands? These goods are daily use items for almost all segments of population. Although expensive face powder and shampoos sold by MNCs or luxury brands will also benefit, the objective of the rate rationalisation exercise is to further simplify the tax structure. Administering a tax based on brand or value of cosmetics will create complexity in tax structure besides posing challenges for administration. Why GST been reduced only on select items such as face powder and shaving cream? The GST rate has been reduced to 5% only on certain goods that are daily use items for most segments of population. 47. Why has GST not been reduced on mouthwash which is also commonly consumed across households like dental floss? GST Council recommended to reduce the GST rate to 5% on tooth paste, tooth brush and dental floss which are in the nature of basic dental hygiene goods. 48. Why has GST rate on coal been increased? Will this not impact electricity cost?Coal attracted, prior to rate rationalization, 5% GST+ Compensation Cess of Rs 400/ton. The Council has recommended to end Compensation Cess and hence the rate has been merged with GST. There is no additional burden. What is the GST rate on spectacles and goggles (heading 9004)? Spectacles and goggles for correcting vision now attract 5% GST (reduced from 12% and 18% respectively), while spectacles and other goggles other than for correcting vision continue to attract GST rate of 18%. Whether the same option of two rates is available to transport of passenger by air? No such option is available for transport of passenger by air i.e. if travel is by economy class then rate of GST is 5% otherwise the GST rate will be 18%. 60. Why not make job work completely tax-free instead of just lowering the rate? Exempting job work services will break the ITC chain, which increases costs. This is especially relevant for the sectors where multiple layers of job-workers are involved. A lower rate of 5% with ITC, gives full credit benefit for businesses thereby avoiding any cascading of tax. Whether the hotel accommodation services, where the value of supply is up to Rs. 7500 per unit per day, or equivalent, will be taxed at 18%? No, the said service will attract GST rate of 5% without ITC. What is the recommended GST rate on beauty and physical well-being services? What all will be covered under this rate? Beauty and physical well-being services including services of health clubs, salons, barbers, fitness centers, yoga, etc. will attract GST rate of 5% without ITC. These services attracted 18% GST earlier. Whether lottery tickets, betting, gambling, horse racing, and casinos attract GST at the rate of 40%? Yes, for all specified actionable claims including betting, casinos, gambling, horse racing, lottery and online money gaming, GST rate of 40% will apply.