GST reform: These items will have highest tax from Monday — Check full list

The Indian central government-led GST Council, after its 56th meeting on 3 September 2025, decided to revamp the prevailing goods and service tax (GST) slab structure into a ‘two-tier’ system in order to simplify the indirect tax structure in India.

From Monday, 22 September 2025, Indian consumers will have an updated ‘two-tier’ tax system where commodities sold in the nation will fall under the 5% or the 18% tax bracket, depending on their nature. As per the current norms, GST in India is levied in four slabs — 5%, 12%, 18% and 28%, which the government has now changed.

The central government's move will, in turn, reduce the prices of many products sold in the Indian economy; however, effective Monday, a large set of products will also attract higher taxes from consumers.

Here are items with the highest GST from Monday

Under the revamped GST structure, the highest GST bracket is 18%. However, a special 40% GST slab has been introduced to replace the mandatory Compensation Cess charges on certain products.

“Since it has been decided to end the Compensation Cess levy, it is being merged with GST to maintain tax incidence on most goods,” said Union Finance Minister Nirmala Sitharaman.

1. Sin Goods (cigarettes, pan masala, etc.): Sin goods are items which are generally considered harmful to health and society. These items include products like Cigarettes, Pan masala, Beedi, and Other tobacco products like chewing tobacco and gutka, online gambling or gaming — will be taxed at a 40% GST rate from Monday, 22 September 2025.

Items which fall under Sin goods —

• Pan masala, gutka, chewing tobacco, unmanufactured tobacco, tobacco refuse (other than tobacco leaves), cigars, cheroots, cigarillos of tobacco or of tobacco substitute, cigarettes.
• Other manufactured tobacco and manufactured tobacco substitutes, “homogenised” or “reconstituted” tobacco.
• Tobacco extracts and essence, products containing tobacco or reconstituted tobacco and intended for inhalation without combustion, etc.

2. Luxury cars: The GST Council also imposed a 40% tax bracket on four-wheelers with an internal combustion engine (ICE) capacity of more than 1,200cc and a length exceeding 4 metres.

Earlier, SUVs or MPVs, which fall under this category, were charged a 28% GST rate and a 22% Cess charge on top of the ex-showroom price.

A report on the GST changes from Kotak Institutional Equities shows that even though the government increased the GST rate to 40% from 28%, customers will have to pay marginally less for bigger cars now, as the overall tax rate has reduced by 10%, when compared with the old GST structure.

3. Above 350cc two-wheelers: The GST Council imposed a 40% tax on two-wheelers above the 350cc engine category, compared to their earlier level of 28% GST and 3% Cess charge. Even though the Cess charge has now been removed, the price of the two-wheelers above the engine capacity of 350cc will now attract a higher tax rate.

4. Soft drinks: Soft drinks and other non-alcoholic beverages such as Coca-Cola, Pepsi, Mountain Dew, Fanta, flavoured waters will witness a price hike as the central government increased the GST rate to 40%, compared to their earlier 28% levels.

This tax slab will also cover aerated sugary drinks, carbonated beverages, carbonated fruit drinks or carbonated beverages with fruit juice, etc.

5. Things to become expensive under the 18% tax bracket: Restaurant dining, especially at air-conditioned and premium outlets, Consumer durables, including refrigerators, washing machines, and air-conditioners, Beauty and grooming services at salons and spas, Premium smartphones and imported gadgets, are items which will attract GST at the higher 18% slab from Monday, 22 September 2025.

The Indian government has increased taxes on conversely, leisure, luxury, and certain lifestyle-related items to prompt citizens of the nation to reconsider their spending habits in the economy.