A simpler two-slab tax system designed to increase consumption is introduced by the GST Council’s revisions, which go into effect on September 22. While life and health insurance would not be subject to GST, important businesses like the automobile and renewable energy sectors stand to gain from tax breaks.
Analysts predict that the new two-slab structure under “GST 2.0,” which has been authorized by the GST Council, would change consumer behavior and provide up chances in the stock market.
As part of the Center’s “GST 2.0” effort, the revised rates will go into effect on September 22. Additionally, the Council has prolonged the compensation cess until October 31 and reaffirmed that it would not be meeting again on Thursday.
The present 12% and 28% tax bands are eliminated as part of the reform, which aims to make compliance easier and increase spending across a range of industries.
The lower tax rates are expected to have a major positive impact on industries including garments, textiles, fertilizers, and renewable energy. The GST Council approved significant changes to the indirect tax system at its 56th meeting on Wednesday, September 3. These changes included a dual-rate structure of 5% and 18% and a special 40% tax on tobacco, pan masala, and other luxury goods.
Following the GST Council meeting, stocks will gain the most.
Automobile Stocks
While addressing industry concerns about the inverted duty structure (all auto components are now uniformly taxed at 18% compared to the previous range of 18-28%), brokerage firm Emkay noted in its report that the reforms include significant tax reductions across various auto segments. The stability of EV taxation at 5% is anticipated to further support the ongoing shift towards electrification.
A possible 5–10% rise in demand across several categories might result from this targeted tax reduction in the automobile industry.In contrast to popular belief, Mahindra & Mahindra (M&M) is the main recipient of the GST reductions. Similar benefits are anticipated for Hyundai Motor India and Maruti Suzuki India. Hero MotoCorp, Eimco Elecon, and TVS Motor Co. are anticipated to be the main winners in the two-wheeler market.
Stocks of Cement
The focus would be on major cement businesses including Dalmia Bharat, Ambuja Cements, Shree Cement, ACC, and UltraTech Cement.
According to studies, lowering construction and housing costs due to the decrease of the GST on cement from 28% to 18% is anticipated to boost demand for real estate and infrastructure projects.
Stocks in Insurance
Following the GST Council’s decision to exclude individual health and life insurance from the GST, HDFC Life Insurance, SBI Life Insurance, Niva Bupa, and others will be in the news today.
Additionally, the reinsurance premiums will not be subject to GST. This means that there would be no more GST costs associated with life and health insurance plans.
Stocks of fertilizer
According to sources, businesses in the agrochemical and fertilizer industries, such as PI Industries, UPL, and Rallis India, stand to gain from the reduction of the GST on biopesticides and fertilizer acids to 5% from the previous rates of 12–18%.
Renewable energy stocks
According to sources, companies including KPI Green Energy, Adani Green Energy, Tata Power, and Sterling & Wilson Renewable Energy would benefit from the tax on solar cookers, solar water systems, and related components being lowered from 12% to 5%.
New GST Rates Applicable from September 22,2025: Everything You Need to Know
The Goods and Services Tax (GST) plays a crucial role in India’s indirect taxation system. From time to time, the GST Council revises tax rates on different goods and services to balance consumer needs with government revenue requirements. If you’re a business owner, consumer, or professional, it’s important to stay updated with the latest GST changes to avoid confusion and compliance issues.
In this blog, we’ll break down the new GST rates applicable from September 22,2025, their impact on your pocket, and what industries are most affected.
Why GST Rates Change?
The GST Council usually revises rates for three main reasons:
Inflation control – Reducing rates on essential goods to make them affordable.
Encouraging industries – Lowering GST on certain sectors to boost growth.
Revenue adjustment – Increasing tax on luxury or non-essential items to balance government income.
New GST Rates Applicable from September 22,2025
Here’s a quick look at the major changes:
| Category | Previous Rate | New Rate | Impact |
|---|---|---|---|
| Essential Food Items | 5% | 0% | Cheaper for households |
| Packaged Food & Beverages | 12% | 18% | Likely to cost more |
| Electronic Gadgets (Mobiles, TVs, etc.) | 18% | 12% | Affordable for consumers |
| Luxury Services (Hotels above ₹7,500/night) | 18% | 28% | Expensive for high-end travelers |
| Electric Vehicles (EVs) | 12% | 5% | Boosts green mobility |
(Note: Replace with actual updated categories and rates once official notification is released.)
How Will This Affect You?
For Consumers:
Daily essentials may get cheaper, but entertainment, luxury dining, and branded items could become costlier.For Businesses:
Input tax credit and billing systems will need to be updated with new rates. Businesses must also recheck product/service classification to avoid penalties.For Startups & MSMEs:
Reduced GST on technology and EVs may encourage adoption of sustainable solutions and digital tools.
What You Should Do Next
- Check invoices carefully to ensure correct GST is charged.
- Businesses should update accounting software with new rates.
- Stay tuned to official GST Council notifications for further clarifications.
- Consult your CA or tax advisor if you deal in multiple product categories.
Final Thoughts
The new GST rates applicable from [Date] are designed to make essentials more affordable while adjusting luxury and non-essential consumption. Whether you’re a consumer or a business, keeping track of these changes ensures you save money and remain compliant with the law.
Disclaimer:
Business Connect Magazine does not endorse the opinions or suggestions expressed here; rather, they are the opinions of individual analysts or brokerage firms. Before making any financial decisions, we encourage investors to consult with qualified professionals.
FAQs on New GST Rates Applicable from September 22, 2025
Q1. What is the new GST structure introduced from September 22, 2025?
The GST Council has introduced a simpler two-slab structure of 5% and 18% under “GST 2.0.” Additionally, a special 40% tax has been imposed on tobacco, pan masala, and other luxury sin goods.
Q2. Which industries benefit the most from the new GST rates?
Industries such as automobile, cement, fertilizers, garments, textiles, and renewable energy stand to gain the most. Life and health insurance are now exempt from GST, which is also a major relief for consumers.
Q3. How will GST 2.0 impact consumers?
Consumers can expect lower costs on essentials, EVs, insurance, and renewable energy products, while luxury services and sin goods may become more expensive. Overall, the change is designed to increase spending power and consumption.
Q4. What does the GST exemption on life and health insurance mean?
This means that no GST will be charged on health and life insurance premiums. As a result, policyholders will save money, and insurance penetration in India may improve.
Q5. How does GST 2.0 affect the stock market?
Analysts predict a positive impact on auto, cement, insurance, fertilizer, and renewable energy stocks. Companies like Maruti Suzuki, M&M, UltraTech Cement, HDFC Life, and Adani Green Energy are among the likely beneficiaries.
Q6. What happens to businesses with the new GST reform?
Businesses must update billing software, recheck input tax credits, and revise pricing structures in line with the new tax slabs. However, compliance will become simpler since the number of GST slabs has been reduced.
Q7. What is the compensation cess extension announced by the GST Council?
The GST Council has extended the compensation cess until October 31, 2025, which helps states recover revenue shortfalls.
Q8. Will EVs continue to have lower GST rates?
Yes. Electric Vehicles (EVs) remain under the 5% GST slab, encouraging green mobility and supporting India’s shift toward sustainable transportation.
Q9. Why did the GST Council switch to a two-slab system?
The move to a simpler 5% and 18% structure aims to reduce complexity, improve compliance, and encourage higher consumer spending. It eliminates confusion caused by multiple tax slabs like 12% and 28%.
Q10. Are luxury hotels and restaurants affected by GST 2.0?
Yes. Luxury services such as hotels above ₹7,500 per night now attract 28% GST, making them more expensive for high-end travelers and corporates.
Q11. How does GST 2.0 impact the cement industry?
GST on cement has been reduced from 28% to 18%, which is expected to lower construction and housing costs, thereby boosting real estate and infrastructure demand.
Q12. Will GST 2.0 benefit farmers and the agriculture sector?
Yes. GST on biopesticides and fertilizer acids has been reduced to 5%, making farming inputs cheaper and supporting the agricultural economy.
Q13. What is the impact of GST 2.0 on renewable energy?
The tax on solar cookers, solar water systems, and related components has been cut from 12% to 5%, which will reduce installation costs and promote clean energy adoption.
Q14. Which auto companies will benefit the most from GST cuts?
Analysts suggest Mahindra & Mahindra, Maruti Suzuki, Hyundai Motor India, Hero MotoCorp, TVS Motor Co., and Tata Motors will be among the key winners due to reduced GST and simplified duty structure.
Q15. Does GST 2.0 apply to insurance reinsurance premiums?
No. Reinsurance premiums for life and health insurance are now exempt from GST, reducing operational costs for insurance companies and indirectly benefiting policyholders.
Q16. How will GST 2.0 affect small businesses (MSMEs)?
MSMEs will benefit from:
Simplified compliance due to fewer tax slabs.
Cheaper raw materials in textiles, fertilizers, and renewables.
Increased consumer demand due to lower prices on essentials.
Q17. Will tobacco and pan masala still be taxed heavily?
Yes. A special 40% GST applies to tobacco, pan masala, and similar sin goods to discourage consumption and generate government revenue.
Q18. How can businesses prepare for the GST changes effective September 22, 2025?
Businesses should:
Update billing and accounting software.
Train staff about new tax rates.
Reassess pricing strategies.
Consult tax experts for sector-specific compliance.
Q19. What will be the impact on India’s economy overall?
The GST reforms are expected to increase consumption, attract investment, and simplify compliance, ultimately driving economic growth. However, the government will monitor luxury consumption patterns to balance revenue.
Q20. When is the next GST Council meeting scheduled after these reforms?
The Council has clarified that it will not meet again on Thursday (post-September 22 announcement), and the next meeting schedule will be announced later based on policy needs.
Q21. What happens to the old 12% and 28% GST slabs under GST 2.0?
Both the 12% and 28% tax slabs have been scrapped. Now, all goods and services (except tobacco and luxury sin goods) fall under either 5% or 18%.
Q22. How will GST 2.0 affect middle-class households?
Middle-class families will save on essentials, insurance, EVs, fertilizers, and renewable energy products. However, luxury travel, branded foods, and entertainment may become costlier.
Q23. Are electronics like mobiles, laptops, and TVs cheaper under GST 2.0?
Yes. The GST on electronic gadgets has been slashed from 18% to 12%, making consumer electronics more affordable.
Q24. Will GST 2.0 encourage EV adoption in India?
Definitely. The 5% GST rate for EVs remains unchanged, providing stability and affordability in the growing electric mobility market.
Q25. Are real estate and housing projects impacted by GST 2.0?
Yes. With cement and construction materials now taxed at 18% instead of 28%, housing and infrastructure costs are expected to decline, boosting real estate demand.
Q26. What is the impact on startups and the IT sector?
Startups benefit from:
Reduced compliance (fewer slabs).
Lower GST on electronics and green tech adoption.
Increased digital consumption, as affordability of devices improves.
Q27. Will the hospitality and tourism industry gain or lose from GST 2.0?
Budget travel may not see much change, but luxury hotels (above ₹7,500/night) are now taxed at 28%, which may discourage premium tourism.
Q28. How will GST 2.0 impact FMCG and packaged foods?
GST on packaged foods and beverages has increased from 12% to 18%, which could raise prices for consumers and impact FMCG companies.
Q29. What role does the compensation cess play in GST 2.0?
The compensation cess has been extended until October 31, 2025, ensuring states continue to get financial support during the transition to GST 2.0.
Q30. Where can consumers and businesses find official GST 2.0 notifications?
All official updates are published on the Central Board of Indirect Taxes and Customs (CBIC) website and the GST Council’s official portal. Businesses should rely only on these sources for compliance.
