The Goods and Services Tax (GST) in India has undergone a major rationalisation, set to be effective from September 22, 2025. The GST Council, in its meeting held on September 3, 2025, announced a significant change of the GST slab structure, removing the 12% and 28% tax slabs. Instead, a new 40% tax rate will be introduced, primarily impacting luxury and sin goods.
This reform aims to simplify the tax structure and ensure that essentials remain affordable, while luxury and sin goods,will be taxed more heavily. As a result of these changes, certain sectors like FMCG (FastMoving Consumer Goods) and consumer durable products stand to benefit, with many goods becoming more affordable.
However, while these adjustments bring considerable changes to various sectors, it’s also important to know what remains unchanged. Understanding these points is crucial for businesses and consumers alike, as it will allow them to better navigate the new GST landscape.
Here are the key areas that have not undergone any changes:
Cigarettes, Chewing Tobacco, Beedis, and Unmanufactured Tobacco
For certain specified goods, such as cigarettes, chewing tobacco products,unmanufactured tobacco, and beedis, the existing rates of GST and the compensation cess will continue to apply. The new tax rates will be implemented at a later date, which will be notified after the entire loan and interest liabilities related to the compensation cess have been cleared.
Threshold for GST Registration Under CGST Act, 2017
There is no change in the threshold limit for mandatory GST registration for goods under the CGST Act, 2017. This means that businesses with turnover below the prescribed limit (currently Rs 40 lakhs for goods, and Rs 20 lakhs for services) are still exempt from GST registration.
Clothing and Apparel (Sale Value ≤ Rs. 2,500)
For articles of clothing and apparel, whether knitted or not, and made-up textile articles (like cotton quilts) with a sale value not exceeding Rs. 2,500 per piece, there is no change in the GST rate, which remains at 5%. This is a significant relief for consumers, especially in the lower to mid-range price segments.
Footwear of Sale Value ≤ Rs. 2,500
For footwear with a sale value exceeding Rs. 2,500 per piece, the GST rate remains at 18%. This ensures that affordable footwear remains within reach of a larger population, while premium footwear products are taxed at a higher rate.
GST on Services
The rationalisation of GST slabs does not directly affect services that were already taxed under the 18% slab, such as education, healthcare, and hospitality. The tax rates for these services continue to apply as per the previous structure unless explicitly revised.
No Changes in Export Provisions
The GST on export provisions, including zero-rating of exports and refund of input tax credits (ITC), remain unchanged. This ensures that Indian exports continue to be competitive in the global market, without being subject to domestic tax burdens.
No Alterations in GST on Gold and Precious Metals
The tax rate on gold, silver, and other precious metals remains unchanged at 3%. These items continue to be taxed at a lower rate compared to other luxury goods, which supports the growth of the jewellery and precious metals industry.
CAclubindia
